"The stock market has come to a realization that the slowdown is worse than expected, that we are not just in a soft patch, but a long-term slowdown,"
NEW YORK (Reuters) – Stocks tumbled on Thursday as a sharp drop in oil fueled an already weak market that faltered after Federal Reserve Chairman Ben Bernanke's downbeat comments a day earlier.
U.S. crude futures dropped 4.4 percent and the dollar climbed sharply after the International Energy Agency (IEA) said it will release 60 million barrels of oil from strategic stockpiles to help the global economy.
The news revived worries over the economy and sent the market back on track toward a correction from the May S&P 500 high of 1,370. Buyers had helped stocks rebound from three-month lows in recent days, but they have evaporated as selling pressure builds.
"In the short term, oil is selling off on the news of the reserve release, but the main problem here is the economic slowdown," said James Dailey, portfolio manager of TEAM Asset Strategy Funds in Harrisburg, Pennsylvania.
The Dow Jones industrial average (.DJI) slid 204.46 points, or 1.69 percent, at 11,905.21. The Standard & Poor's 500 Index (.SPX) took off 20.20 points, or 1.57 percent, at 1,266.94. The Nasdaq Composite Index (.IXIC) was down 30.76 points, or 1.15 percent, at 2,638.43.
The S&P was just couple points above its 200-day moving average, a key level of buying support, at 1262.57.
"The stock market has come to a realization that the slowdown is worse than expected, that we are not just in a soft patch, but a long-term slowdown," Dailey said.