Wall Street's recent sell-off accelerated on Tuesday, with the benchmark S&P posting its worst day in four months, stung by worries about slowing economic growth, and oil prices suffered their biggest percentage decline this year on worries about weakening demand from China.
Signs of a cooling U.S. recovery after Friday's release of disappointing data on jobs creation in March and the euro zone's festering debt crisis fuelled a view of tepid global growth, stoking safety bids for gold as well as U.S. and German government debt.
Oil prices closed down below $120 a barrel in London after China, the world's second largest oil consumer, reported a decline in imports of crude oil in March, raising concerns about its oil demand and a slowdown in the Chinese economy.
The pullback on Wall Street came on the cusp of the first-quarter earnings season, with U.S. aluminium giant Alcoa kicking off the reporting season after the bell.
We've clearly seen a major slowdown in earnings, which are dependent on global growth now that profit margins have stopped expanding, and global growth isn't great right now with all the issues in Europe, said Jim McDonald, chief investment strategist at Northern Trust Global Investments in Chicago, which has about $650 billion in assets under management.
All three major stock indexes fell below key support levels, and 80 percent of shares listed on the New York Stock Exchange and the Nasdaq Stock Market ended lower.
The S&P 500 fell below its 50-day moving average of 1,372.30, an area viewed as a significant support level that will make or break the current uptrend.
Dropping below that level suggests a loss of momentum, and it looks pretty widespread, said Katie Stockton, chief market technician at MKM Partners in Greenwich, Connecticut, adding that the S&P 500 could fall to about 1,350 before finding a new level of support.
The Dow Jones industrial average <.DJI> lost 213.66 points, or 1.65 percent, to 12,715.93 at the close. The Standard & Poor's 500 Index <.SPX> dropped 23.61 points, or 1.71 percent, to 1,358.59. The Nasdaq Composite Index <.IXIC> tumbled 55.86 points, or 1.83 percent, to 2,991.22.
During the current downdraft, the S&P has lost 4 percent and hit its lowest level in a month. It touched a four-year high last Monday and is still up 8 percent for the year to date.
After the market closed, Dow component Alcoa Inc.
European shares hit a 10-week low on Tuesday on the first trading day after the four-day Easter weekend. Financials, miners, automakers and energy sectors bore the brunt of the sell-off, reacting to Friday's weak U.S. jobs report and data released on Tuesday showing no growth in France's economy in the first quarter. <.EU>
The FTSEurofirst 300 index <.FTEU3> of top European shares finished down 2.48 percent at 1.026.15 points. The index has fallen more than 7 percent since hitting an eight-month high in mid-March and is up just 2.7 percent so far this year.
The broad weakness in equities knocked the MSCI global stock index <.MIWD00000PUS> down for a sixth consecutive session. It lost 1.5 percent and fell to its lowest level since early February.
In the currency market, the euro fell 0.2 percent versus the dollar to $1.3082, near a one-month low of $1.3033 set on Monday. Against the yen, the euro was down 1.2 percent at 105.55 yen after an earlier low of 105.46 yen - its lowest level against the yen since February 22.
Both Spanish and Italian yields spreads over German Bunds widening, extending their moves from last week when the U.S. jobs numbers added to concerns about the global economic outlook. The rising risk premiums on Spanish and Italian debt reflect renewed worries about the ability of Italy and Spain, the euro zone's third and fourth biggest economies, to repay their loans.
Benchmark 10-year Treasury notes last traded up 18/32 in price with a yield of 1.982 percent, the lowest level in about four weeks.
German Bund futures were up 1.25 percentage points at 140.40, their highest level since March 7.
In oil trading, Brent crude settled down 2.27 percent at $119.88. U.S. oil fell $1.44 or 1.4 percent to $101.02 a barrel.
Spot gold clung to gains in choppy trading. It was last up 1.1 percent at $1,658.19 an ounce.
(Additional reporting by Rodrigo Campos, Chris Reese and Julie Haviv in New York, Richard Hubbard and Jessica Mortimer in London; Editing by Leslie Adler)