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Business Title: US Stocks Slump As Investors Flee Risk; DJIA Sheds 424 (now -521) --U.S. stocks, global markets suffer on renewed recession worries --10-Year Treasury yields hits lowest level since 1940s --Stocks hit fresh session lows in afternoon trading By Brendan Conway Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- U.S. stocks slumped Thursday in a session that saw investors stage a flight from risk in markets around the globe, which were wracked by fears of a renewed economic slowdown. The Dow Jones Industrial Average fell 424 points, or 3.8%, to 10701 as of 2:35 p.m. EDT, off session lows after steepening an early loss in afternoon trading. Ten-year Treasury yields hit 1940s levels and the U.S. dollar surged as investors clamored for "safe" assets. The action built on the stock market's Wednesday selloff after the Federal Reserve acknowledged "significant" downside risks to the economy and noted " strains" in global financial markets, a reference to debt-strapped Europe. A weak reading on manufacturing in China also contributed to the slowdown fears. Adding to the grim mood was a lack of appreciable progress in containing Europe's debt crisis, which has weighed on markets for months. The Standard & Poor's 500-stock index shed 41 points, or 3.4%, to 1127 in recent action, while the technology-oriented Nasdaq Composite slumped 88 points, or 3.5%, to 2450. All blue-chip stocks were in the red, as were all S&P 500 sectors. Materials and energy stocks were hit hardest in the S&P 500, each falling 5.3%. "They're selling literally everything," said Alan Valdes, director of floor trading at DME Securities at the New York Stock Exchange. "It's the realization that things aren't getting better that has traders concerned. They're selling gold, they're selling copper, they're selling everything." European stocks closed sharply lower. The Stoxx Europe 600 shed 4.6% to hit the lowest level in more than two years in intraday trading. Asian bourses also dropped sharply, with China's Shanghai Composite losing 2.8% on news that manufacturing activity in China contracted in September. Hong Kong's Hang Seng index slid 4.9%. "The average person wakes up in the morning and they see 'global growth fears' across the board," said Benjy Schwartz, chief market strategist at Lightspeed Financial. "The Fed has been projecting a rough view of growth for some time. Yesterday, they came strong with it." As investors spurned equities, they fled to the dollar. The U.S. currency jumped by as much as 1% versus the euro Thursday. In the afternoon, the euro rebounded from its deepest trough since mid-January at $1.3384, trading about a cent higher in afternoon dealings. Investors also piled into the safety of Treasury securities, pushing down the benchmark 10-year note's yield to the lowest since the 1940s. In recent trade, the 10-year note yielded 1.7198%. The first improvement in U.S. jobless claims data in three weeks did little to change the negative tone of trading. New claims for unemployment benefits last week dropped by 9,000 to a seasonally adjusted 423,000, according to the Labor Department. The level remains too high to suggest much improvement in the stubbornly weak U.S. jobs market. In addition, the previous week's figure was revised to reflect more jobless claims. Investors also shrugged off other modestly positive economic data Thursday morning. The Conference Board's index of leading economic indicators increased for the fourth consecutive month in August and government data showed that U.S. home prices increased in July for the fourth straight month. In the backdrop was a flareup in U.S. debt worries, the result of the surprise failure of a bill to fund the U.S. government through mid-November. Conservative Republicans and most Democrats teamed up for the largest defeat inflicted on the Republican House majority this year. The episode was a reminder of market gyrations this summer, when Washington was caught in an impasse of raising the limit on federal borrowing. In corporate news, shares of Goodrich gained 10% after the aircraft-components maker agreed to be acquired by blue-chip conglomerate United Technologies for $ 16.4 billion in cash. United Technologies fell 8.5%. FedEx slipped 8.6% after the package-delivery service reported fiscal first- quarter results that were higher than expected, but said it slightly reduced its earnings outlook as it looked to adjust its cost structure to match lower demand. Red Hat gained 1.7%. The software company reported better-than-expected fiscal second-quarter results. CarMax lost 9.7%. The used-car dealership chain's results missed estimates for the first time in about two and a half years amid a decline in customer traffic and same-store sales, which it attributed to the recent economic slowdown and weakness in consumer confidence.
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