NEW YORK — U.S. stocks tumbled on Thursday, with the S&P 500 posting its biggest daily decline since November 2011, as investors reacted to the Federal Reserve’s plan to begin winding down its stimulus program later this year if economic conditions permit.Here are the closing numbersTSX — 11,968.57 -299.72 -2.44%S&P 500 — 1,588.19 -40.7 -2.50%Dow — 14,758.32 -353.87 -2.34%Nasdaq — 3,364.63 -78.57 -2.28%The Dow Jones industrial average posted its biggest loss of the year, plummeting 353.87 points to 14,758.32 after dropping 206 points Wednesday. The S&P 500 index lost 40.74 points to 1,588.19 while the Nasdaq fell 78.57 points to 3,364.63The Toronto stock market headed deeper into the red for a second day Thursday, as the S&P/TSX composite index ended its worst single-day sell-off since April 15 by closing down 299.71 points or 2.44% at 11,968.57. That left the TSX down 465 points or 3.75% so far this year.The slide cut across all sectors as the TSX was also caught up in headwinds resulting from a disappointing read on Chinese manufacturing, which sent prices for oil and copper tumbling.The greatest damage to market sentiment came from the Fed after chairman Ben Bernanke signalled an end to the central bank’s US$85-billion of bond purchases each month, likely slowing later this year and ending in 2014. The timing depends on economic data.The Canadian dollar also got caught up in the volatility, tumbling 0.94 of a cent to 96.4 cents US.The Fed has been buying bonds as a way of keeping long-term interest rates low in the hope of boosting borrowing and spending. But the inflow of cash into financial markets has also helped fuel a boom on many world markets, including New York where the Dow industrials had been up more than 16% on the year.That rally, which extended to Europe and Japan, left Toronto in the dust, in large part because the TSX is so heavily weighted in favour of resource stocks that have suffered because of a sluggish global recovery.Analysts say that investors weren’t expecting Bernanke to say the program could end so quickly, and are now having to adjust their holdings to anticipate higher U.S. interest rates.Some analysts wondered why markets viewed this as such a negative since higher rates should mean the economy is doing better.“We have got away with murder recently with the low interest rates,” said Ron Meisels, president of Phases & Cycles Inc. in Montreal.“People are naive not to think that interest rates are going to eventually have to move up, which means together that bond prices are coming down (and yields going up). Is it going to happen today? No.”Thursday’s market slide was the latest instance of volatility that started May 22 when Bernanke first mentioned that the U.S. central bank could be ready to start tapering its bond purchases.Indications of such a slowdown of bond purchases have also had the effect of sending bond yields higher. That is because prices would be impacted by the Fed not buying as many bonds. When bond prices are depressed, the yield moves higher.The benchmark U.S. 10-year Treasury was down from early highs but still at 2.42% late Thursday afternoon, up sharply from 2.25% before the Fed’s announcement Wednesday afternoon. The yield had been as low as 1.6% at the beginning of May.Those rising yields have caused big problems for another part of the market — interest rate sensitive stocks on the TSX such as utilities, telecoms, REITs and pipelines.“When bond yields are going down and dividend yields are staying constant or going up, it makes interest sensitive stocks more appealing,” explained Gareth Watson, vice-president Investment Management and Research at Richardson GMP Ltd.“When rates start to go higher, then all of a sudden bonds can offer a better return on a relative basis . . the gap on returns between bonds and equities starts to narrow. So in other words, the equities become less attractive.”For example, the utilities sector is down almost 12% this month while telcos have fallen about seven%.Resource stocks have also taken a beating on the TSX, reflecting lower commodity prices and sluggish global growth, with the base metals sector is down 16% this month and 30% year to date.Those stocks fell steeply Thursday after HSBC said that the preliminary version of its monthly purchasing managers index for China fell to a nine-month low of 48.3 in June, down from 49.6 in May. Numbers below 50 indicate a contraction in the manufacturing sector.Commodities slid as a result of demand concerns following the disappointing Chinese data and the higher U.S. dollar.A higher U.S. dollar pressures commodities because a stronger greenback makes it more expensive for holders of other currencies to buy oil and metals, which are dollar-denominated.The price of copper on the New York Mercantile Exchange lost eight cents to US$3.06 a pound, leaving the base metals sector down almost five%.Gold has also suffered mightily, with the TSX global gold sector down more than 40% year to date after dropping more than seven% Thursday.Gold stocks have already had a tough time as the bottom line of miners has been under pressure from rising costs to get the ore out of the ground.On top of that, bullion prices have been slammed. Aggressive monetary stimulus programs by central banks have supported gold prices since the 2008 financial crisis and subsequent recession, partly because of worries about inflation. But prices have eroded as inflation remains tame and the global economic outlook continues to improve.On Thursday, gold fell $87.80 to US$1,286.20 an ounce, putting it below $1,300 for the first time in nearly three years. Goldcorp Inc. (TSX:G) faded $2.12 to C$24.81 while Barrick Gold Corp. (TSX:ABX) declined $1.45 to $17.10.The July crude contract fell $2.84 to US$95.40 a barrel, pushing the energy sector down 2.3%. Suncor Energy (TSX:SU) gave back 68 cents to C$30.83.The utilities sector gave back 4.74% while TransAlta Corp. (TSXL:TA) declined 48 cents to $12.91.The telecom sector shed 2.27% and BCE Inc. (TSX:BCE) was down 97 cents to $43.15.Bank stocks also contributed to the dismal showing on the TSX with Royal Bank (TSX:RY) down $1.77 to $58.92.With files from ReutersWhat investors were watching todayGlobal markets succumb to sell-off after Fed signals end to stimulusFed likely to reduce bond buying this year, Bernanke saysChina is a ‘crash waiting to happen’Gold and silver miners under pressure as prices diveON DECK FRIDAYCANADA8:00 a.m.Consumer price index, May 8:30 a.m.Retail sales, April

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