Stocks smacked by Europe woes; Dow off triple digits

U.S. stocks dropped sharply on Thursday, tracking European shares, after soft data from Italy and as investors worried about one of Portugal’s top banks.

“We used to have a Europe crisis every two weeks, now we have one every nine months,” said JJ Kinahan, chief strategist at TD Ameritrade.

Investors sought safety in U.S. Treasuries and gold, with the yield on the benchmark 10-year note falling 4 basis points to 2.512 percent and gold futures jumped $17.40, or 1.3 percent, to $1,341.70 an ounce on the New York Mercantile Exchange.

The Chicago Board Options Exchange Volatility Index, a measure of investor uncertainty, jumped more than a point, or 13.2 percent, to 12.66.

In Europe, stocks from the euro-zone’s periphery led declines, with Portuguese bonds stumbled amid concerns about the health of the financial group Banco Espirito Santo.

Read More Portugal concerns compound global selloff

Also weighing on sentiment was a report showing Italian industrial output down 1.2 percent in May from the prior month, its largest monthly drop since late 2012, fueling concern for that nation’s economy.

DJIA Dow Jones Industrial Average 16829.85 -155.76 -0.92%
S&P 500 S&P 500 Index 1954.98 -17.85 -0.90%
NASDAQ Nasdaq Composite Index 4362.02 -57.01 -1.29%

The Dow Jones Industrial Average shed 153.61 points, or 0.9 percent, at 16,832, with 28 of 30 components in the red.

Financials led sector declines on the S&P 500, which dropped 16.90 points, or 0.9 percent, to 1,955.93.

The Nasdaq.declined 51.77 points, or 1.5 percent, to 4,367.26.

Ahead of Thursday’s open, Wall Street bypassed another upbeat indicator on the U.S. jobs market, with stock-index futures only furthering their fall after applications for jobless benefits last week fell by 11,000 to a better-than-expected 304,000.

Read More US jobless claims flirt with 300K, eye post-recession lows

“Portugal’s bank still has a problem, no matter what jobless claims were,” said Kinahan at TD Ameritrade.

On Wednesday, U.S. stocks climbed, recouping a chuck of the prior two-day drop, after minutes from the Federal Reserve’s last meeting noted an improving economy and labor market, while setting the stage for the central bank’s eventual exit from its course of monetary easing.

Read More Stocks end higher after 2 day drop; end of QE in view