S&P turns negative for year in broad sell-off

Business Update: Global sell-off
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By Caroline Valetkevitch
NEW YORK (Reuters) - Stocks suffered their worst one-day loss in two months, dropping the S&P 500 back into negative territory for the year on Monday in a broad-based sell-off, as investors reconsidered the health of the economy.
Shares of economically sensitive sectors such as financials, energy and materials led the S&P 500's .SPX decline. A sharp drop in U.S. crude oil futures and other commodities hit shares of companies sensitive to those prices, including Exxon Mobil Corp (XOM.N), which lost 3.1 percent to $68.84.
Analysts said investors were keen to sell shares that led the market up in its rally since early March. Major averages have largely been trading sideways in recent weeks and many investors have speculated that more obstacles were in store for stocks.
"The recovery is likely to be anemic by post-war standards," said Hugh Johnson, chief investment officer of Johnson Illington Advisors, in Albany, New York. "The recovery in the economy and earnings is unlikely to be as strong as the rise in stock prices since early March has implied."
Underscoring worries about the economy's outlook, the World Bank said prospects for the global economy remain "unusually uncertain" as it cut 2009 growth forecasts for most economies.
The Dow Jones industrial average .DJI dropped 200.72 points, or 2.35 percent, to end at 8,339.01. The Standard & Poor's 500 Index .SPX was down 28.19 points, or 3.06 percent, at 893.04. The Nasdaq Composite Index .IXIC was down 61.28 points, or 3.35 percent, at 1,766.19.
European shares also slid, with the FTSEurofirst 300 .FTEU3 index of top European shares hitting its lowest closing level since mid-May.
WORST DAY SINCE LATE APRIL
It was the worst day for the three indexes since April 20 when results from Bank of America (BAC.N) reignited concerns about the banking industry.
The S&P financial index .GSPF fell 6.2 percent, while the energy index .GSPE dropped 4.6 percent. The financial sector saw the biggest gains since the S&P 500 hit a 12-year closing low in early March, and the sector is still up more than 80 for that period. The S&P, meanwhile, is up 32 percent from its March closing low.
"Some people are skeptical of how the summer is going to play out and may be taking some profits," said John O'Brien, senior vice president at MKM Partners LLC in Cleveland.
While lower crude oil prices tend to be a positive for the broader stock market, they often hurt shares of energy companies by giving investors a reason to unload some holdings in that sector.
Crude oil prices fell $2.62, or almost 4 percent, to settle at $66.93 a barrel. Chevron Corp (CVX.N) sank 3.4 percent to $65.76.
Metal prices also slid, dragging down shares of resource companies. Freeport-McMoRan Copper & Gold Inc (FCX.N) dropped 11.3 percent to $45.18.
On the Nasdaq, big-cap technology stocks led the decline. Continued...
Source: Reuters