Stock trading light ahead of holidays
NEW YORK » Stocks pulled back yesterday after economic data pointing to weakness in regional manufacturing and a slowing U.S. economy weighed on investor sentiment. Trading was light ahead of the holiday weekend.
Stocks fell after the Philadelphia Federal Reserve's December business index, which gauges regional manufacturing activity, came in at a negative 4.3 compared with a positive reading of 5.1 in November. It was the weakest showing since 2003.
Before release of the Philadelphia Fed report, investors shrugged off news that the economy grew at a slower pace in the third quarter than had been estimated. Gross domestic product fell to 2 percent in the third quarter amid a cooling real estate market; the Commerce Department estimated a month ago that the reading would be closer to 2.2 percent.
"I think with the low volume nobody is really around to trade the stuff," said Ryan Larson, senior equity trader at Voyageur Asset Management, a unit of RBC Dain Rauscher. "So I wouldn't put too much credence in this pullback."
The Dow Jones industrial average fell 42.62, or 0.34 percent, to 12,421.25.
Broader stock indicators also lost ground. The Standard & Poor's 500 index slipped 5.22, or 0.37 percent, to 1,418.31, and the Nasdaq composite index lost 11.76, or 0.48 percent, falling to 2,415.85.
Materials stocks, hurt by declining prices of metal and copper, were among the laggards yesterday. Alcoa Inc. was the weakest of the 30 stocks that comprise the Dow, falling 74 cents, or 2.5 percent, to $29.30.
Bonds rose sharply on the weaker economic data, with the yield on the benchmark 10-year Treasury note falling to 4.55 percent from 4.60 percent late Wednesday. The dollar was lower against other major currencies, while gold prices fell.
Light, sweet crude oil fell $1.06 to $62.66 per barrel on the New York Mercantile Exchange.
Comments from Richmond Federal Reserve President Jeffrey M. Lacker, who has long warned of the threat of inflation to the economy, further dented sentiment yesterday. According to prepared remarks of a speech in Charlotte, N.C., Lacker said: "The risk that core inflation surges again, or does not subside as desired, clearly remains the predominant macroeconomic policy risk."
Larson noted that the comments weren't surprising as Lacker has dissented in the central bank's recent decisions to leave short-term interest rates unchanged.