Mid- and small-capitalization stocks sank for a third straight day on Thursday in a wide selloff on continued fears about the global economy's growth prospects.

All ten S&P sectors fell more than 2 percent on both the small and mid-cap levels, with areas tied to economic growth the hardest hit. Both the small-cap .6GSPE and mid-cap .4GSPE energy indexes fell more than 5 percent as crude oil prices sank 4.8 percent.

Even groups considered defensive were roundly lower, with the mid-cap telecom sector .4GSPL down 3.1 percent and the small-cap utility sector .6GSPU off 2.2 percent.

Factory activity in the U.S. Mid-Atlantic region plummeted in August, falling to the lowest level since March 2009, while existing home sales unexpectedly dropped in July, tempering hopes for a revival of economic recovery. For details, see [ID:nN1E77H0E8]

Concerned the European debt crisis might spread to U.S. banks, the Federal Reserve Bank of New York has asked for more information about whether the U.S. units of big European lenders have reliable access to funds needed to operate, the Wall Street Journal reported. [ID:nL5E7JI0Q]

We're just feeding off negative news today, said Joseph Cangemi, managing director at BNY ConvergEx Group in New York. The data was very weak and the sentiment in Europe is having an adverse impact. In the short-term, there's a lack of support and probably no bottom.

Some disappointing corporate earnings also weighed on sentiment. NetApp Inc (NTAP.O) and JDS Uniphase Corp (JDSU.O) both plummeted after giving weak revenue outlooks, underlining concerns about anemic tech spending prospects ahead. [ID:nL3E7JI2MI] and [ID:nL3E7JH3FA]

NetApp shed 17 percent to $34.38 while JDS was off 10 percent to $10.50. The mid-cap information technology sector .GSPT lost 5.4 percent.

Despite the weakness, markets remained above the lows hit in last week's declines, which were also sparked by concerns over Europe and economic growth prospects.

The S&P MidCap 400 index .MID fell 4.3 percent while the S&P SmallCap 600 index .SML slipped 4.1 percent. In comparison, the benchmark S&P 500 .SPX dropped 4 percent.

Only six companies in the small-cap index were higher, led by Hot Topic Inc (HOTT.O), up 8.2 percent to $7.52 a day after forecasting a return to full-year same-store sales growth. [ID:nL3E7JH3B1]

The top-performing mid-cap stock was Eastman Kodak (EK.N), which surged for a second day on optimism over the value of the company's patent holdings. Shares surged 15 percent to $3.10.[ID:nN1E77G1KN]

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