Stock market today: Worries about the economy hit Wall Street, and the Dow drops nearly 500 points [Video]

TOKYO – Just a day after rallying on hopes that the Federal Reserve is about to cut interest rates, U.S. stocks tumbled Thursday after weak data raised worries the Fed may have missed its window to do so before undercutting the economy’s growth.

The S&P 500 sank 1.4% after a report showed U.S. manufacturing activity is still shrinking, and its contraction is accelerating. Manufacturing has been one of areas of the economy hurt most by high rates, and the report from the Institute for Supply Management helped extinguish what had been gains for U.S. stock indexes early in the morning.

The Dow Jones Industrial Average dropped 494 points, or 1.2%, and had been down more than 700 points earlier in the day, while the Nasdaq composite sank 2.3%.

The action was even stronger in the bond market, where the yield on the 10-year Treasury tumbled below 4%, back to where it was in February. Besides the soft manufacturing data, …