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Jun 05, 2012, 11.28 AM IST
MARKETS-USA-STOCKS:Wall St set for 4th straight drop on economy, Europe
NEW YORK (Reuters) - U.S. stocks extended their most recent selloff on Monday as investors reacted to the latest indications o f an economic slowdown and looked ahead to events this week that could help ease Europe's debt crisis.
The decline extended Friday's steep drop that wiped out the Dow industrials' gain for the year, although additional declines may lack intensity after indexes fell below key technical support levels.
The benchmark S&P 500 is on track for its fourth straight session of declines.
Signs of economic weakness around the globe and Europe's intensifying debt crisis have rattled investors, who have been dumping riskier investments like commodities and equities for the perceived safety of higher-rated government bonds.
The S&P 500 dropped 2.5 percent on Friday, its biggest drop since November 9, with economically sensitive sectors such as banks and energy among the hardest hit, reflecting investor sentiment about the stability of the global economy.
"It's a continuation of the flight to safety, or flight to quality, that we have observed over the last week or so," said Peter Jankovskis, co-chief investment officer of OakBrook Investments LLC in Lisle, Illinois.
"Frankly, at this point, the market probably is ready for a rally with the right catalyst."
Friday's selloff pushed the S&P 500 below its 200-day moving average, seen as a key support level.
U.S. banking stocks are sliding into a bear market as Europe's debt crisis pressures the sector. The KBW Bank index <.BKX>, which measures the performance of 24 U.S. banks, is down more than 18 percent from its intraday high in March. In Monday afternoon trading, the index was down 2.4 percent for the day.
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The Dow Jones industrial average <.DJI> dropped 59.04 points, or 0.49 percent, to 12,059.53. The Standard & Poor's 500 Index <.SPX> lost 7.74 points, or 0.61 percent, to 1,270.30. The Nasdaq Composite Index <.IXIC> declined 11.48 points, or 0.42 percent, to 2,736.
In a potential boost for markets looking for measures to end the debt crisis that has been at the root of investor angst, German Chancellor Angela Merkel is pressing for much more ambitious measures, including a central authority to manage euro-area finances and major new powers for the European Commission, European Parliament and European Court of Justice.
Spanish Prime Minister Mariano Rajoy is advocating a direct European rescue for the country's banks with moral support from the European Commission, but Germany appeared cool to such a move for the euro zone's fourth biggest member.
Economic data showed orders for manufactured goods dropped 0.6 percent in April, its third decline in four months and confounding expectations calling for a 0.2 percent gain.
An experimental Bristol-Myers Squibb
Medtox Scientific IncO> surged 35.4 percent to $26.68 after Laboratory Corp of America Holdings
(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)
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