Investors seek signs as pullback continues
NEW YORK » Wall Street extended its pullback yesterday as investors, retrenching from an optimistic stance early in the week, waited to see how well corporate earnings and the job market have held up in an uneven economy.
The market showed little conviction for a second day as economic readings offered few surprises and as investors looked for signs -- possibly from the September employment report due tomorrow -- of whether the market's sharp rebound from mid-August lows has been warranted.
The decline yesterday preceded earnings reports from the recently completed third quarter and tomorrow's jobs number, which can signal whether consumer spending will continue apace.
Wall Street had little reaction to a report that the nation's service sector, whose industries account for 80 percent of U.S. economic activity, showed a decline last month. Also, the Mortgage Bankers Association said mortgage application volume fell 2.7 percent in the week ended Sept. 28.
"With all those numbers, unless it's really bad we're fine because people can say it's still a function of the dislocations that we saw in August," said Kurt Wolfgruber, chief investment officer at OppenheimerFunds Inc.
"There are a lot of cross currents," said George Shipp, chief investment officer at investment adviser Scott & Stringfellow in Richmond, Va. "The general pattern is that the U.S. economy is slowing."
The Dow Jones industrial average fell 79.26, or 0.56 percent, to 13,968.05. The Dow moved back above 14,000 on Monday after spending 2 1/2 months below that level amid concerns about soured mortgages, tighter access to credit and the ongoing housing market slump.
Broader stock indicators also fell. The Standard & Poor's 500 index fell 7.04, or 0.46 percent, to 1,539.59, and the Nasdaq composite index fell 17.68, or 0.64 percent, to 2,729.43.
The Russell 2000 index of smaller companies fell 5.82, or 0.70 percent, to 826.15.
Declining issues outnumbered advancers by about 5 to 3 on the New York Stock Exchange, where volume came to 1.25 billion shares compared with 1.27 billion traded Tuesday.
Bond prices slipped yesterday after the economic readings and as stocks came off their lows. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 4.54 percent from 4.53 percent late Tuesday.
In commodities trading, gold prices fell, extending a sharp fall seen Tuesday. Oil prices fell for the fourth session, settling down 8 cents at $79.97 per barrel on the New York Mercantile Exchange, after the government reported an unexpected increase in crude oil inventories.
The dollar rose against other major currencies.
Wall Street appears to be taking many economic readings in stride, perhaps expecting some slowdown before the Federal Reserve's rate cut is reflected in economic data.
Often, such cuts can take more than a year to fully work themselves into the economy.
Many investors expect the central bank to trim rates further this year, but there is debate over whether another reduction might come at the Fed meeting Oct. 30-31 or in December.