Oct. 9 (Bloomberg) -- U.S. stocks plunged Thursday, with the Standard & Poor’s 500 Index’s erasing its biggest rally this year, on concern that slowing growth in Europe will hurt the American economy as the Federal Reserve ends its bond purchases.

All 10 of the main S&P 500 groups dropped at least 0.5 percent, with energy stocks plunging 3 percent to pace losses. Materials producers sank 1.9 percent even as precious metals rallied. Alcoa Inc. lost 4.7 percent after unofficially starting the earnings season.

The S&P 500 dropped 1.5 percent to 1,939 at 12:54 p.m. in New York, after rallying 1.7 percent yesterday. The Russell 2000 Index dropped 2.2 percent, the most since July. The Dow Jones Industrial Average sank 271.72 points, or 1.6 percent, to 16,722.50, trimming its gain this year to less than 1 percent. Trading in S&P 500 stocks was 29 percent above the 30-day average at this time of day.

“The fear is that global interest rates are so low that there’s risk of deflation, and the economic recovery, which has shown some steady progress, is now deteriorating,” Timothy Ghriskey, who helps oversee $1.5 billion as chief investment officer for Bedford Hills, New York-based Solaris Asset Management LLC, said in a phone interview. “The news out of Europe is nothing new, but it’s come to front and center now with Draghi’s new comments.”

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.