The S&P 500 stock index was down for the eighth straight day, a string of declines not seen since 2008 during the global financial crisis. Weak service sector data from Asia, Europe and America on Wednesday followed evidence of slowing growth in manufacturing in many countries on Monday.
Investors worry that fiscal cutbacks in Europe and the U.S. at a time of stagnating global output endanger the global recovery. "Like (with) manufacturing, the trend is undeniable. We have been slowing now since the beginning of the year," said Tom Porcelli, U.S. economist at RBC Capital Markets in New York referring to the services ISM data.
"This will not quell the chatter in the market that we may be moving toward a recession." Gold hit a record for a second straight day, driven by deepening fears over the spread of the European debt crisis and its impact on regional growth, while data showed a number of central banks bought the precious metal in June.
Spot gold was last quoted at $1,667.49 an ounce past noon New York time (1600 GMT) having earlier hit a record $1,672.65 per ounce.
Energy and industrial metals prices fell as the economic view darkened. Brent slipped below $115 per barrel, U.S. crude fell under $93 and copper lost 1.2 percent. The Reuters/Jefferies CRB commodities index lost 0.5 percent. Data showing a build up in U.S. oil stockpiles pressured crude oil prices further. At midday in New York (1600 GMT), the Dow Jones industrial average dropped 110.24 points, or 0.93 percent, to 11,756.38.
The S&P 500 lost 9.88 points, or 0.79 percent, to 1,244.17. The Nasdaq Composite Index fell 10.28 points, or 0.39 percent, to 2,658.96. "Investors have simply run out of optimism.
They see few reasons to move the market forward," said Andrew Wilkinson, senior market analyst at Interactive Brokers Group in Greenwich, Connecticut. MSCI's world equity index fell 1.3 percent and was down for a sixth straight session, after hitting its weakest since early December. European stocks fell 2.0 percent to their lowest closing level in almost a year. In foreign exchange markets,
the Swiss franc retreated from record highs after the Swiss National Bank unexpectedly cut interest rates to counter its rise. Declines are seen temporary, though, as global growth concerns drive investors towards the perceived safety os the Swiss currency. "At best, SNB's move may slow the rise of the Swiss franc, but will certainly not reverse it," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. The benchmark 10-year U.S. Treasury note was up 12/32, with the yield at 2.5705 percent.
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