Stocks slip on oil price and manufacturing data
NEW YORK » Wall Street skidded lower yesterday after a weaker-than-expected reading on the manufacturing sector and a spike in oil prices to $100 a barrel triggered concerns of a further slowdown in the overall economy.
The major indexes each lost more than 1 percent, with the Dow Jones industrials giving up more than 200 points.
The Institute for Supply Management's report that its manufacturing index fell to 47.7 percent for December from 50.8 percent in November raised concerns that the economy could be slowing at a quicker pace than some investors had estimated. The reading below 50 signals economic contraction.
Analysts had anticipated that manufacturing would expand modestly in December.
"It certainly is a soft number and the declines in production and new orders are eye-catching," said Alan Levenson, chief economist at
T. Rowe Price Associates Inc. "Overall, the ISM has generally been a decent guide for the economy. This is a sharp decline in one month."
Light, sweet crude rose $3.64 to $99.62 per barrel on the New York Mercantile
Exchange after earlier hitting $100 for the first time. The rise follows violence in the oil-producing nation of Nigeria, concerns about weather-related production halts in Mexico and speculation that inventory figures will show drops in levels of U.S. supplies.
Stocks failed to gain momentum after an initial bounce after minutes from the Federal Reserve's last meeting. Central bankers, who voted to raise interest rates a quarter percentage point, called the economic outlook "unusually uncertain."
While that strengthened the case for lower rates, it also confirmed some of the market's worst fears about the economy.
The Dow Jones industrial average fell 220.86, or
1.67 percent, to 13,043.96. The blue chips briefly fell below 13,000 for the first time since November.
Broader stock indicators also fell sharply. The Standard & Poor's 500 index slid 21.20, or 1.44 percent, to 1,447.16, and the Nasdaq composite index fell 42.65, or 1.61 percent, to 2,609.63.
The Russell 2000 index of smaller companies fell 12.48, or 1.63 percent, to 753.55.
Bond prices surged after the ISM report. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.89 per-
cent from 4.03 percent late Monday. The dollar was mixed against other major currencies, while gold prices reached a 28-year high.
Declining issues outnumbered advancers by about
2 to 1 on the New York Stock Exchange, where volume came to 1.23 billion shares.
In corporate news, National City Corp. fell 87 cents, or
5.3 percent, to $15.59 after halving its dividend and shutting down its wholesale mortgage business.
Chip stocks fell after Bank of America issued a bearish assessment for the sector.
Intel Corp. fell $1.31, or
4.9 percent, to $25.35, while Advanced Micro Devices fell
36 cents, or 4.8 percent, to $7.14.
Amazon.com Inc. gained $3.61, or 3.9 percent, to $96.25 after Citi Investment Research raised its rating on the online retailer.