U.S. stocks plunged Friday, threatening to erase the week's gains, as rising fears about fallout from Europe's debt crisis overshadowed President Barack Obama's plan to revive the U.S. job market.
Shortly after markets opened, the European Central Bank said that be a key official had resigned for personal reasons. Juergen Stark, the bank's top economist, is seen as an advocate of higher interest rates. Published reports said he opposed the bank's extensive purchases of debt issued by heavily-indebted member nations.
Stark's resignation might be a sign of deepening disagreement over how to solve Europe' economic problems.
On Thursday evening, President Obama unveiled a $447 billion package of tax cuts and new spending aimed at boosting hiring. He spent much of the speech challenging Congress to put aside political theatrics and pass the bill.
It's not clear whether that can happen. Republicans control the House and many of them oppose any new spending. Some reacted by calling the plan is a rehash of failed strategies.
At 10:45 a.m. Eastern time, the Dow Jones industrial average fell 152 points, or 1.3 percent, to 11,144. The S&P 500 index dropped 13, or 1.1 percent, to 1,173. The Nasdaq composite index slid 17, or 0.7 percent, to 2,512.
The Dow is down more than 1 percent for the week. It has fallen in five of the past six weeks, and four of the past five trading sessions.
It has been a tough quarter for stock markets. Fears about a spreading debt crisis in Europe and the slowing global economy have encouraged traders to sell shares and make bets seen as less risky.
The S&P 500 is down 10 percent since the third quarter started in July. However, it has recovered almost 6 percent since its lowest close this year on Aug. 8.
The government reported at 10 a.m. that sales for wholesale businesses were flat in July. It was the worst result since May.
Comments by Federal Reserve Chairman Ben Bernanke Thursday continued to weigh on markets. Traders have watched the Fed closely since the economic recovery slowed this spring and summer. Many want the central bank to buy more government debt or take other action aimed at lowering long-term interest rates. When Bernanke failed to give more hints about any plans, markets were disappointed.
The Fed wants to lower long-term rates in part to boost banks' lending to people and companies. But Treasury yields already are near historic lows. The policy has done little to revive the struggling housing market or boost hiring.
The yield on the 10-year Treasury note plunged to 1.95 percent, just above a record low, as traders fled to safer bets. On Monday, the 10-year yield fell to 1.91 percent, the lowest since the Federal Reserve Bank of St. Louis began keeping daily records in 1962. If the Fed acts to lower long-term rates, analysts expect the yield to fall further.
Markets in Europe skidded lower after the news from the ECB. France's CAC 40 and Germany's Dax fell about 3 percent. London's FTSE lost 2.
Early Friday, Asian markets mostly fell. Japan's Nikkei 225 index closed down 0.6 percent. The government had reported that Japan's economy shrank faster than previously estimated.
Shares of chipmaker Texas Instruments Inc. fell a percent after the company lowered its third-quarter revenue guidance below analysts' expectations, citing lower demand across a range of products, markets and customers.
McDonald's Corp. shares fell after the company said a key revenue metric missed analysts' expectations. McDonald's said that revenue at restaurants open at least 13 months rose 3.5 percent in August. Analysts had expected a 4.9 percent increase.
Shares of Bank of America Corp. fell nearly 2 percent after The Wall Street Journal that it might cut up to 14 percent of its workforce as part of a massive restructuring. Bank of America already has cut at least 6,000 jobs this year. CEO Brian Moynihan announced a management shake-up this week.
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