June 21 (Bloomberg) -- U.S. stocks tumbled, sending the Standard & Poor’s 500 Index lower for a second day, as signs of a slowdown in global manufacturing added to disappointing housing and labor market data at the world’s largest economy.
Alcoa Inc. and Chevron Corp. slumped at least 3.2 percent as commodities were poised to enter a bear market. Bed Bath & Beyond Inc. lost 17 percent as its earnings forecast trailed estimates. Red Hat Inc., the largest seller of the open-source Linux operating system, fell 5.8 percent as billings missed some projections. ConAgra Foods Inc. rose 3.1 percent as the maker of Hebrew National hot dogs forecast profit that beat estimates.
The S&P 500 retreated 2 percent to 1,328.61 at 3:37 p.m. in New York. The Dow Jones Industrial Average declined 217.29 points, or 1.7 percent, to 12,607.10. The Russell 2000 Index dropped 2.4 percent to 765.58. Trading in S&P 500 companies was about in line with the 30-day average at this time of day.
“The global economy has lost momentum,” said James Dunigan, who helps oversee $112 billion as chief investment officer in Philadelphia for PNC Wealth Management. “It feels like those patches where we’ve stalled a bit. We may come back out of it, but we’ll have to wait.”
Stocks from Hong Kong to London and Sao Paulo slumped on concern about a global slowdown. Data showed euro-area manufacturing shrank at the fastest pace in three years and a Chinese output gauge indicated contraction. More Americans than forecast filed claims for jobless benefits, manufacturing in the Philadelphia region shrank and sales of existing homes fell.
The reports came out a day after the Federal Reserve cut its forecasts for growth and employment while noting “significant downside risks” to the economy. The Federal Open Market Committee yesterday extended its Operation Twist program and will swap $267 billion in short-term securities with longer- term debt through the end of 2012. Alan Greenspan, the former Fed chairman, said the U.S. economy “looks very sluggish.”
The Citigroup Economic Surprise Index for the U.S., which measures how much data is missing or beating the median estimates in Bloomberg surveys, fell to minus 64.8, the lowest since August. It turned negative this year in April after remaining above zero since October. The Federal Reserve announced Operation Twist to boost growth on Sept. 21, 2011, four months after the index turned negative.
A challenging economic environment has made Goldman Sachs Group Inc. analyst Noah Weisberger recommend shorting the S&P 500, or bet on further declines. He has a target of 1,285, or 5.2 percent below yesterday’s close.