US stocks plunge amid Europe sell-off

NEW YORK—US stocks dropped sharply in midday trading on Friday, after the resignation of a top German economist at the European Central Bank added to fears over Europe’s sovereign debt crisis.

The Dow Jones Industrial Average was down 292.44 points (2.59 percent) to 11,003.37 at 1625 GMT.

Meanwhile, the broader S&P 500 fell 29.39 points (2.48 percent) to 1,156.51 and the tech-heavy Nasdaq Composite was down 55.28 points (2.19 percent) to 2,473.86.

Early losses accelerated after the unexpected news that ECB chief economist Juergen Stark, a key representative of Germany at the eurozone’s central bank, was resigning “for personal reasons”.

The ECB’s announcement sent European markets into a tailspin and raised new concerns about a split within the bank over the handling of Europe’s debt crisis, which has weighed heavily on markets in recent weeks.

Banking stocks were down sharply, with JPMorgan Chase falling 3.8 percent and Bank of America slumping 2.5 percent.

The Wall Street Journal reported Friday that Bank of America was considering eliminating up to 40,000 jobs as part of a huge cost-cutting plan aimed at bolstering its sagging profits.

McDonald’s shares dived 4.8 percent after the restaurant giant reported worse-than-expected sales in August.

In US news, the jobs plan unveiled by President Barack Obama late Thursday received good reviews from economists, with Macroeconomic Advisers saying it would boost US gross domestic product (GDP) by 1.3 percent in 2012.

But analysts voiced skepticism that the plan could pass a deeply divided Congress, with the House of Representatives controlled by opposition Republicans.

“Everything the president said sounded on point, but the overriding point for the market is that none of this means anything unless Congress says it does,” said Patrick O’Hare, an analyst with Briefing.com.

Bond prices surged. The yield on the 10-year Treasury note fell to 1.92 percent from 1.99 percent late Thursday, while that on the 30-year bond declined to 3.25 percent from 3.31 percent.

Bond prices and yields move in opposite directions.