Stocks plunge after weak manufacturing numbers

(AP) NEW YORK - A batch of weak economic reports sent stocks lower Thursday. The worst of the bunch was a regional manufacturing index that sank for the second straight month.

The Philadelphia branch of the Federal Reserve reported that manufacturing in the Northeastern U.S. slumped this month, pulled down by drops in new orders and shipments. Economists had expected no change in the index. It was the worst reading since last August.

The Dow Jones industrial average fell 251 points to close at 12,574. The Standard & Poor's 500 index lost 30 points to 1,326. The drop in the two stock indexes wiped out their gains for the week. The Nasdaq composite finished down 71 points at 2,859, down 2.4 percent.

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"The news has been horrible out there," said Uri Landesman, president of Platinum Partners. "The U.S. economy is slowing down. And China's growth is definitely under question."

In China, a gauge of manufacturing sank in June, pulled down by weaker orders for goods. A similar survey for countries that use the European currency also showed a contraction. The reports helped sink commodity prices. Copper and platinum fell 2 percent. The price of oil dipped below $80 for the first time since October.

Benchmark U.S. crude, on a steady slide since May, hit a low of $79.82 per barrel in morning trading.

Material and energy companies, whose fortunes are closely tied to economic swings, led eight of the 10 industry groups within the S&P 500 index lower. Utilities and telecommunication companies, which are considered defensive investments because of their reliable cash flows and rich dividends, edged higher.

The market got off to a weak start after the Labor Department reported a small drop in the number of people applying for unemployment benefits. Figures for the previous week were revised higher. Those are bad signs for the job market because they indicate that companies are still laying off workers.

A report on the housing market offered little help. The National Association of Realtors said Thursday that sales of previously occupied homes dropped 1.5 percent in May from the previous month.

In Europe, auditors calculated that Spain's troubled banks need as much as 62 billion euros ($78.76 billion). A Bank of Spain official said this scenario was much less than the 100 billion euros that the 17 countries in the currency union said they would provide for Spain's banking sector.