10:05 AM New York – U.S. stocks opened lower after a plunge of more than 6% in Nikkei dragged markets in Asia and in Europe. U.S. weekly jobless claims declined 12,000 and retail sales in May increased 0.6%.
Stocks on Wall Street opened lower and extended world markets decline after the Nikkei in Tokyo plunged more than 6%.
The S&P 500 index declined 0.1% to 1,610.95 and the Nasdaq Composite Index decreased 0.05% to 3,398.72.
In addition, World Bank lowered its estimate of global growth to 2.2% from the previous 2.4% forecast released in January. The current assessment is for the slower growth than 2.3% in 2012.
U.S. retail sales in May increased 0.6% after rising at 0.1% in April, Commerce Department said today. Sales excluding autos and other categories increased 0.3%, the data used in the calculation of the GDP.
Of the 13 major categories, eight showed an increase with the auto sales registering the largest gain in six months.
Separately, the Labor Department said jobless claims declined 12,000 to 334,000 in the week ending on June 8 from 346,000 in the previous week.
European markets opened lower after a sharp plunge in Japan and growing fears of unpredictable actions from the central banks in the U.S. and Europe.
The DAX index in Frankfurt dropped as much as 1.5% before recovering half the losses and the CAC 40 in Paris declined 0.7%. The FTSE 100 index in Paris fell 1.1%.
On the economic front, wholesale price in Germany declined 0.1% in May from a year ago month after falling 0.4% in April. The second monthly decline surprised most economists who were looking for the prices to increase 0.2%.
The volatile Japanese markets plunged into a bear market territory as foreign and domestic investors sold shares and unwound the yen-hedge.
The Thursday’s drop in Tokyo was one of many declines in last three weeks after market indexes staged a spectacular rally since November and accelerated gains on April 4 after the Bank of Japan announced measures to double the liquidity in the financial system.
The Nikkei accelerated gains that started on November and built more advance since April 4 and peaked on May 23. However, the Nikkei has pared gains since then and trading has been volatile and at close today the index is down 21% from the peak.
The Nikkei 225 Stock Average plummeted 784.78 or 5.9% to 12,504.54 and Topix index plunged 52.37 or 4.8% to 1,044.17.
The yen strengthened to 93.75 against one dollar in today’s trading. The yen strengthened to the level last seen in April and well below its 4-year peak of 103.73 on May 22.
The plunge in Tokyo dragged markets in Asia. The Hang Seng index in Hong Kong declined 2.2% and the Sensex in Mumbai fell 1.1%.
Today’s decline in Singapore extended losses since May 23rd to more than 9% and in Hong Kong extended to 10%.
In addition, rupee in Mumbai drifted lower after Finance Minister Chidambaram’s comments failed to reassure investors of the speedy reforms and government efforts to weaken inflation.