Stocks, US dollar slide overnight

Traders Frederick Reimer, left, and Edward Curran work on the floor of the New York Stock Exchange. File photo / AP

Wall Street dropped overnight after reports showed declines in US retail sales and producer prices, fuelling concern about the impact of the slowdown in the global economy and the effect on corporate profits.

In afternoon trading in New York, the Dow Jones Industrial Average plunged 2.34 per cent, the Standard & Poor's 500 Index sank 2.58 per cent, while the Nasdaq Composite Index slumped 2.20 per cent.

Slides in shares of Intel and those of JPMorgan, both down 5.7 per cent, propelled the Dow's decline in afternoon trading.

A Commerce Department report showed retail sales fell more than expected last month, declining 0.3 per cent, after a 0.6 per cent increase in August.

"Consumers have turned more cautious," Ted Wieseman, an economist at Morgan Stanley in New York, who cut his third-quarter GDP growth forecast to 3.1 per cent from 3.4 per cent on the figures, told Reuters.

Separately, the New York Fed's Empire State business conditions index plunged more than expected to 6.17 in October, down from 27.54 in September, while a Labor Department report showed producer prices unexpectedly fell in September, sliding 0.1 per cent for the first drop in more than a year.

"The clincher is that some of the concerns about Europe and the other economies slowing down has reached our shores today with the retail sales number and the PPI number," Scott Armiger, portfolio manager at Christiana Trust in Greenville, Delaware, told Reuters.

The Chicago Board Options Exchange Volatility Index, considered investors' fear gauge, soared 30 per cent to 29.70. Earlier in the session it touched the highest level since 2011.

The US dollar also weakened, sliding 1.2 per cent against the yen, and 1 per cent against the euro.

Meanwhile, about US$623 billion in US government debt changed hands by 12 pm New York time, Bloomberg News reported, citing ICAP. That's just below the record US$662.2 billion traded on May 22, 2013, when former Fed Chairman Ben Bernanke mentioned the possibility of slowing bond purchases.

"The market has been forced to wake up fast as we are getting capitulation to the broader global forces," Larry Milstein, managing director in New York of government-debt trading at RW Pressprich & Co, told Bloomberg.

"The Fed is data dependent," Milstein said. "Europe is very weak and the US is starting to show weakness, and the market is taking notice, pushing the timing of tightening back, until there is a reason not to."

Europe's Stoxx 600 finished the session with a 3.2 per cent drop from the previous close. The UK's FTSE 100 Index slid 2.8 per cent, Germany's DAX shed 2.9 per cent, while France's CAC 40 declined 3.6 per cent.

US-listed shares of Shire plummeted, last down 31.7 per cent, after AbbVie said it was reconsidering its US$55 billion takeover of Shire after the US government recently announced new rules aimed at deals designed to lower tax. AbbVie shares last traded 1.4 per cent lower.