Markets take another hard fall

SAN FRANCISCO – U.S. stocks started the new month with more than 2 percent losses Friday, turning the Dow industrials negative for the year and pushing the S&P 500 into correction territory, after a U.S. jobs report showed slim growth in May.

The report, following downbeat data from China and Europe, raised serious concerns about the health of the global economy and sent investors running into Treasurys and gold.

The Dow Jones industrial average fell 274.88 points, or 2.2 percent, to 12,118.57, its worst day since Nov. 9. The index is down 0.8 percent for the year.

The S&P 500 dropped 32.29 points, or 2.5 percent, to 1,278.04, undercutting what analysts see as support at 1,280. The index is 9.9 percent off its 52-week closing high, reached on April 2.

A 10 percent pullback, which is often termed a technical correction, “doesn’t mean we’re in a bear market. But it does mean you have to recalibrate for a world where the U.S. is going to barely grow 2 percent, Europe is a chronic source of stress, and emerging markets, at least for now, are not contributing much,” said Russ Koesterich, global chief investment strategist at BlackRock iShares.

The S&P 500 cut its year-to-date gains to 1.6 percent, while the Nasdaq is 5.5 percent higher for the year so far, largely due to strong gains in the first quarter.

Stocks were set up for a tough day after global manufacturing data.

Rival surveys of Chinese manufacturing activity showed tepid growth or contraction last month.

Eurozone manufacturing activity shrank at the fastest pace in three years in May, to 45.1 percent, according to a Markit purchasing managers index.

In the U.S., the Institute for Supply Management said its manufacturing index fell to 53.5 percent in May. Economists polled by MarketWatch had forecast a slide to 54 percent. Readings above 50 indicate the sector is still expanding.