U.S stocks nosedive as data points to end of stimulus; Dow drops 2.34%

U.S. stocks plummeted on Thursday after regional U.S. manufacturing data and housing numbers beat expectations a day after Federal Reserve Chairman Ben Bernanke said stimulus measures may wind down this year and end next year if the economy improves.

Stimulus programs tend to push up stocks as a side effect, and talk of their dismantling can bruise equities prices.

At the close of U.S. trading, the Dow Jones Industrial Average finished down 2.34%, the S&P 500 index ended down 2.50%, while the Nasdaq Composite index fell 2.28%.

The Federal Reserve Bank of Philadelphia said earlier that its manufacturing index rose to 12.5 in June from -5.2 in May, well above expectations for a -2.0 reading.

A separate report showed that U.S. existing home sales climbed 4.2% to 5.18 million units in May from April’s total of 4.97 million, far surpassing market calls for a 0.6% increase.

Elsewhere, the Department of Labor said the number of individuals filing for initial jobless benefits in the U.S. last week rose by 18,000 to 354,000 compared to expectations for an increase of 4,000 to 340,000.

Federal Reserve stimulus tools such as its monthly USD85 billion bond-buying program have pushed up stock prices in recent years, and the end of such liquidity injections could prompt investors to park their money elsewhere, which fueled a massive day of selling on Wall Street and elsewhere

Leading Dow Jones Industrial Average performers included Cisco Systems, down 0.93%, Alcoa, down 1.11%, and Caterpillar, down 1.25%.

The Dow Jones Industrial Average's worst performers included Walt Disney, down 3.61%, Intel, down 3.24%, and Microsoft, down 3.18%.

European indices, meanwhile, finished lower.

After the close of European trade, the EURO STOXX 50 fell 3.63%, France's CAC 40 fell 3.66%, while Germany's DAX 30 finished down 3.28%. Meanwhile, in the U.K. the FTSE 100 finished down 2.98%.