Stocks slide as European bailout brings worries of economic slump; Euro sinks to 19-month low

Stocks tumble on worries about European growth

NEW YORK — Stocks dropped again Friday after concerns grew that the deep spending cuts under Europe’s bailout plan could slow a global recovery. The euro dropped to a 19-month low.

The Dow Jones industrial average fell 235 points in late afternoon trading following a slide of more than 3 percent in European markets. Investors seeking safety piled into Treasurys, the dollar and gold, which hit another record. Crude oil sank 4 percent, and an indicator of stock market volatility jumped.

Currency traders have been moving out of the euro throughout the week because of concerns that cost-cutting measures in countries like Greece, Spain and Portugal would slow economic activity on the continent and elsewhere. Now stock investors are also looking at those same problems.

“Clearly the action in the euro is reflecting the fact that at least currency investors don’t think the bailout plan plus the austerity measures are sufficient,” said Uri Landesman, president of Platinum Partners in New York. “The euro is leading the market down.”

There were also concerns about corporate profits. Shares of credit card companies tumbled after the Senate voted to force them to reduce fees for debit card transactions. Visa fell 10 percent, while Mastercard lost 9.3 percent.

Earlier in the week, stocks rose sharply after a nearly $1 trillion rescue package was launched by the European Union and International Monetary Fund in hopes of containing a debt crisis in Greece.

But the glow from the bailout package has faded throughout the week, pushing the euro down sharply against the dollar. The spike in the dollar has hit the prices for oil and other commodities, hurting major U.S. energy and materials companies.

Investors now worry that the spending cuts in Europe being called for in the bailout package will curtail the ability of weaker countries like Spain and Portugal to grow their way out of a recession. More strikes are expected in Spain and Greece as workers protest cuts in pensions and other public spending.

The euro, which is used by 16 countries, slid as low as $1.2359 in New York, its weakest point since October 2008. The euro has dropped more than 6 percent since the beginning of the month and is close to its lowest level in four years.

In the final hour of trading, the Dow fell 236.02, or 2.2 percent, to 10,546.93. The Dow has fallen seven of the last nine days.

The Standard & Poor’s 500 index lost 29.75, or 2.6 percent, to 1,127.69, while the Nasdaq composite index fell 66.95, or 2.8 percent, to 2,327.41.

Stocks extended losses from Thursday, when the Dow fell about 114 points. A lackluster report on weekly jobless claims and a disappointing forecast from department store Kohl’s drove major indexes lower. A slide in the euro also hit the market late in the day.

Treasurys jumped, pushing down yields. The yield on the benchmark 10-year Treasury note fell to 3.43 percent from 3.53 percent late Thursday.

The Chicago Board Options Exchange’s Volatility Index — known as the market’s fear gauge, jumped 24.5 percent.

Gold hit a record of $1,249.70 an ounce before retreating to $1,233.10.

Crude oil fell $2.79 to $71.61 per barrel on the New York Mercantile Exchange.

Investors looked past improved reports on April retail sales and industrial production.

The Commerce Department said sales rose 0.4 percent in April. That was double the forecast by economists polled by Thomson Reuters. It was the seventh straight monthly rise in sales, providing hope that a consumer rebound will hold and help the economy grow.

The Federal Reserve said industrial production rose 0.8 percent in April, better than the 0.6 percent growth forecast by economists. It was the biggest jump in output from the nation’s factories, mines and utilities since January.

Manufacturing growth has been steady in recent months as the sector plays a leading role in the domestic recovery.

Among stocks, Visa Inc. fell $3.59 to $77.14 and Mastercard Inc. fell $21.58 to $210.73 after the Senate vote to curb fees on debit cards.

Ten stocks fell for every one that rose on the New York Stock Exchange, where volume came to 1.1 billion shares compared with 835 million traded at the same point Thursday.

The Russell 200 index of smaller companies lost 23.02, or 3.2 percent, to 686.83.

Britain’s FTSE 100 dropped 3.1 percent, Germany’s DAX index fell 3.1 percent, and France’s CAC-40 tumbled 4.6 percent.

Augstums reported from Charlotte, N.C.