(Fixes typographical error in paragraph 3)
By Ryan Vlastelica
NEW YORK, Oct 9 (Reuters) - U.S. stocks fell more than 1 percent on Thursday, erasing the previous session's sharp rally as concerns grew over the pace of economic growth.
German exports slumped by 5.8 percent in August, the biggest drop since January 2009, following data earlier this week that showed industrial orders and output suffered their steepest drops in more than five years.
"Weakness continues to pervade European economies, and that's leading to some nervousness with how earnings will play out," said Bill Lynch, director of investments at Hinsdale Associates, in Hinsdale, Illinois.
Energy shares were by far the weakest on the day, dropping 3.6 percent in their biggest one-day decline since April 2013. Chevron Corp fell 2.9 percent to $114.60 while Exxon Mobil lost 2.8 percent to $91.97. Crude oil lost 1.8 percent to $85.72 per barrel.
The day's losses were broad, however, with all ten primary S&P 500 sectors down on the day, though the losses were outsized in cyclical groups tied to the pace of economic growth.
Material shares fell 2.1 percent while industrial shares lost 1.9 percent. Among specific names, U.S. Steel Corp fell 7.2 percent to $33.95 while Caterpillar Inc sank 3.1 percent to $93.67.
Adding to the market's worries, St. Louis Federal Reserve Bank President James Bullard said he was concerned about the disconnect between when the stock market expects the U.S. central bank to begin raising rates, and when the Fed itself does.
"The markets are making a mistake," Bullard said. "I have been concerned that the market path of interest rates is lagging behind what the committee is thinking. When there is a mismatch, it doesn't end well."
Wall Street had its biggest one-day advance of the year on Wednesday, after the Fed reassured investors that the first rate hike would come when economic data indicated the market could withstand an increase.
The Dow Jones industrial average fell 289.6 points, or 1.7 percent, to 16,704.62, the S&P 500 lost 33.35 points, or 1.69 percent, to 1,935.54 and the Nasdaq Composite dropped 74.36 points, or 1.66 percent, to 4,394.23.
Markets have been volatile of late, with the S&P 500 posting a move greater than 1 percent in four of the past five trading days. Over the past 14 sessions, the benchmark index has posted a daily move of 24.12 points, more than twice the 10.35 average at the start of September.
Declining issues outnumbered advancing ones on the NYSE by 2,591 to 396, for a 6.54-to-1 ratio on the downside; on the Nasdaq, 2,218 issues fell and 391 advanced for a 5.67-to-1 ratio favoring decliners.
The benchmark S&P 500 index posted 21 new 52-week highs and 14 new lows; the Nasdaq Composite recorded 22 new highs and 149 new lows. (Editing by Nick Zieminski)