Dow sheds 104 on economic worries
NEW YORK » A mixed economic picture sent stocks tumbling yesterday, with the Dow Jones industrials falling more than 100 points after investors were unnerved by weakness in home sales, consumer confidence and manufacturing. An upward revision in the fourth-quarter gross domestic product, meanwhile, raised worries about higher interest rates.
The GDP showed that the economy grew at an annual rate of 1.6 percent, much better than the 1.1 percent the Commerce Department initially estimated and beating the 1.5 percent economists predicted. The GDP is the broadest measure of the economy's performance -- and one indicator of whether the economy continues to grow fast enough to prompt additional interest rate hikes by the Federal Reserve.
The day's other data showed soft spots in the economy. Sales of existing homes fell for the fifth consecutive month January, exacerbating some investors' concerns that a fall in homes sales and refinancings could choke off a source of wealth for consumers, slowing their spending.
Consumer confidence numbers reinforced that worry, dropping below analysts' estimates in February, according to The Conference Board, a New York-based private research group. And a survey of Chicago-area purchasing managers fell unexpectedly; it's seen as a precursor of national manufacturing figures due to be released Wednesday.
"The GDP (gross domestic product) upgrade could put more pressure on the Fed," said Jack A. Ablin, chief investment officer at Harris Private Bank. "At the same time, we're losing ground with the consumer. ... From the perspective of today's market, it's a one-two punch."
The Dow fell 104.14, or 0.94 percent, to 10,993.41.
Broader stock indicators also fell sharply. The Standard & Poor's 500 index fell 13.46, or 1.04 percent, to 1,280.66, and the Nasdaq composite index fell 25.79, or 1.12 percent, to 2,281.39, hurt by a sharp decline in Google Inc.
Crude oil futures rose. A barrel of light crude was quoted at $61.41, up 41 cents, in trading on the New York Mercantile Exchange.
With scant earnings reports and few Federal Reserve speeches, economic data should continue to dominate the week, said Alexander Paris, economist and market analyst for Chicago-based Barrington Research.
"The problem is, investors have been going back and forth," about economic data, he said, pushing stocks higher on weak economic data one day, then lower on poor data another day.