Bad economic news sends financial markets sharply lower

NEW YORK — Wall Street slumped more than 2 percent in its worst day in more than two months Wednesday after data that pointed to an economy running out of steam.

A sharp dive in private job growth and a continued slowdown in the manufacturing sector combined to send the Dow Jones industrial average down more than 250 points, its biggest drop since early March. Treasury bond prices rose to their highest level of the year as traders placed a larger value on safer investments.

Doubts about the U.S. economy's strength that built throughout May were compounded by a pair of reports that were weaker than investors expected. The ISM's manufacturing index fell to 53.5 in May from 60.4 in April. It had been as high as 61.4 in February. Still, a reading of more than 50 indicates the manufacturing industry is growing.

And private employers added just 38,000 jobs in May, down from 177,000 in April, according to payroll processor ADP. Analysts had expected 180,000 new jobs. The Labor Department's more comprehensive report, which includes hiring by both private employers and the government, is released Friday.

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