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Economy Title: Obama Birthday Crash: Stocks Slump Over 2%, Dow Dives 300 Points Stocks eased off their session lows but were still sharply lower across the board in another volatile session Thursday as fears over a global economic slowdown intensified and ahead of the widely-followed monthly unemployment report. Major U.S. Indexes The Dow Jones Industrial Average plunged over 2 percent, led by Caterpillar [CAT 91.9805 -4.2995 (-4.47%) ] and Alcoa [AA 13.52 -0.74 (-5.19%) ], after rebounding from a deep selloff in the previous session to snap an eight-day losing streak. The blue-chip index tumbled 372 points at its session low and is down for the 9th day in 10. The S&P 500 and the tech-heavy Nasdaq also tumbled. The S&P entered its "correction territory," defined by a drop of 10 percent from its peak from its intraday high in May. Both the S&P and Nasdaq are currently trading in negative territory for the year. The CBOE Volatility Index, widely considered the best gauge of fear in the market, surged almost 15 percent to trade above 26. All 10 S&P sectors were trading lower, led by energy, materials and industrials. “You’re at critical levels here—the Dow has marginally broken through yesterday’s low and the S&P has yet to do that,” Art Cashin, director of floor operations at UBS Financial Services told CNBC. “If they break through noticeably, then we could be in for further selling.” Read More: 'Sell Hysteria and Buy Panic'—Strategist “The fact that we’re getting the heavy volume indicates that we might be getting some selling from offshore—people who can’t raise money in Europe might be trying to raise it over here,” Cashin said. European shares hit a two-year low. The Bank of England and European Central Bank both left rates unchanged, but it did little to improve investor confidence. The ECB signaled it was buying government bonds in response to a deepening European debt crisis. "It is true that we are experiencing a high level of uncertainty, not just in the euro zone," said ECB President Jean-Claude Trichet, adding that "downside risks may have intensified." On the economic front, weekly jobless claims were little changed last week, edging down to a seasonally adjusted 400,000, according to the Labor Department. “The jobless claims number was not too encouraging … we need to see more of a significant improvement than the data just squeaking by,” said Doreen Mogavero, president and CEO of Mogavero Lee & Company. The claims news comes ahead of Friday's government non-farm payroll data, which likely increased 85,000 last month, according to a Reuters survey, after rising only 18,000 in June. The unemployment rate is expected to hold steady at 9.2 percent. “We’ve reduced our equity exposure by half at the end of the second quarter,” said Rob Stein, portfolio manager and senior economist of Astor Asset Management. “We’ll need to see the economic data stabilize.” Adding to day's woes, JPMorgan [JPM 38.78 -1.12 (-2.81%) ] cut its third-quarter U.S. economic growth forecast by 1 percent, pointing to recent developments in the U.S. economy. The firm added that it doesn't expect the Fed to raise interest rates until at least 2013. The dollar soared against a basket of currencies. The greenback's surge came amid a weakening economic outlook and moves by Japan to intervene in the forex market to bolster the yen. Meanwhile, gold reversed its gains, trading below $1,653 an ounce as investors opted for cash to cover losses outside of the bullion market amid deepening losses on Wall Street. Bank of NY Mellon [BK 24.07 -0.58 (-2.35%) ] announced it will start charging "large depositors" to hold cash due to a sudden increase in dollar deposits prompted by fears among its customers. Among earnings, GM [GM 26.39 -0.78 (-2.87%) ] fell even after after the automaker posted earnings that nearly doubled, as the firm a larger share of sales globally and raised prices on its vehicles. Kraft Foods [KFT 35.09 0.79 (+2.3%) ] was the only Dow component to trade higher after the food manufacturer earnings beat estimates, raised its guidance and announced it will split in two. AIG [AIG 27.25 -0.94 (-3.33%) ] and Sunoco [SUN 37.3775 -1.5325 (-3.94%) ] are expected to post earnings after-the-bell tonight. U.S. warehouse club operator Costco [COST 77.762 0.682 (+0.88%) ] posted a better-than-expected chain-store sales, helped by higher gas prices and strengthening foreign currencies. Teen-oriented chains Hot Topic [HOTT 7.43 -0.04 (-0.54%) ] and Wet Seal [WTSLA 4.64 -0.19 (-3.93%) ] blew past estimates, but rival Zumiez [ZUMZ 22.72 -4.38 (-16.16%) ] missed expectations. Coming Up This Week: THURSDAY: Money supply; Earnings from AIG, Sunoco FRIDAY: Employment situation, consumer credit; Earnings from P&G
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