NEW YORK ( TheStreet) -- The benchmark S&P 500 index suffered its biggest daily decline in three weeks on Wednesday and it's justifiable to point the finger at the World Bank after it slashed its global economic outlook.
The United Nations' bank said global markets got off to a bumpy start this year, besieged by poor weather in the U.S., financial market turbulence and the conflict in the Ukraine. As such, it has cut its 2014 world growth projections to 2.8% from 3.2%.
Markets closed with the S&P 500 down 0.35% to 1,943.9, gapping from its record-breaking 1,950-level achieved at the beginning of the week. The Dow Jones Industrial Average lost 0.6% to 16,843.88. Also in the red, albeit to a lesser degree, the Nasdaq dropped 0.14% to 4,331.93 in afternoon trading in what had been a volatile session for the tech-heavy index.
Failing to rally the bulls, the midafternoon release of the U.S. Treasury May budget showed a 6% lower deficit of $130 billion compared to the same period last year. The narrower loss painted a sunnier short-term picture for the government's finances given May is usually a deficit month with no noteworthy taxes due.
Bank of America (BAC - Get Report) dragged on the S&P 500 after The New York Times reported it had reached an impasse with the Justice Department in negotiations over a multibillion-dollar settlement deal. We can add that to the list of BofA's growth concerns. Shares slid 2.1% to $15.59.
Boeing (BA - Get Report) was one of the Dow's biggest losers of the day, tumbling 2.3% to $134.10. Reasons for the fall were twofold: first, RBC Capital downgraded the stock to "sector perform"; second, Emirates cancelled a $16 billion plane order with Boeing competitor Airbus which brought into question whether strong demand for long-haul jets can continue.
American International Group (AIG) tapped long-time JPMorgan (JPM) executive Peter Hancock as its new CEO, choosing a man with scant background in insurance but deep experience in the type of complex financial instruments that forced the giant insurer to take a $182 billion bailout. The news wasn't enough to save the stock; shares slipped 0.42% to $54.78.
European stocks fell on Wednesday amid a raft of earnings downgrades, and after the World Bank cuts its global growth forecast. Asian stocks were mixed.
U.S. markets closed mixed Tuesday with no impetus to make big moves. The S&P 500 recovered to close 0.02% lower.
--By Keris Alison Lahiff and Andrea Tse in New York