Wall Street slips more than 2% on poor economic data

The US markets slumped more than 2% following several economic reports that confirmed a struggling recovery and after Moody's downgraded Greece's bond ratings deeper into junk status. The CBOE volatility index surged 18.45%.

Dow Jones Industrial Average slipped 2.22% or 279.65 points at 12290.14. Nasdaq Composite shed 2.33% or 66.11 points at 2769.19. Standard & Poor's 500 declined 2.28% or 30.65 points at 1314.55.

On economic data front, index of manufacturing fell to 53.5 in May from 60.4 in April, the lowest level since September 2009.

Construction spending, meanwhile, rose 0.4% in April And also private sector added only 38,000 jobs in May, far less than what most analysts had expected. The weak economic news is prompting analysts to cut their forecasts for April non-farm payrolls, which will be released on Friday.

In economic data to watch out for, the weekly jobless data is expected to be out today. Consensus figures show a decline in the jobless claims to 420,000 from 424,000.

Factory orders meanwhile may see a decline to 0.9% for April as compared to the 3% recorded in March. On the commodities front, the weekly crude inventory data is expected to be out today.

In the currency space, the euro plunged to a session low on the back of the Greek downgrade news. The dollar too dropped to the lowest in three weeks against major peers as reports showed slower-than-forecast jobs growth and reduced factory output, adding to concerns the US economy is slowing.

Onto commodities, oil declines for a second day, dropping more than 2% as concerns that slowing economic growth will curb petroleum demand were reinforced by disappointing reports on US private sector employment and manufacturing.

However in precious metals, gold futures rose to a 4-week high as the slumping dollar and a decline in US equities boosted demand for the precious metal as an alternative asset.