GDP and jobless data fuel Wall Street drop
NEW YORK » Wall Street sank yesterday, after weak readings on economic growth and the job market touched off renewed concerns about the financial health of businesses and consumers. The Dow Jones industrial average fell more than 200 points.
The Commerce Department's report that gross domestic product grew at a 1.9 percent pace in the second quarter disappointed investors. Economists polled by Thomson Financial/IFR had expected growth of 2.4 percent in the broad measure of the economy's health.
Investors were also concerned about U.S. Labor Department data saying that the number of people seeking jobless benefits jumped to the highest level in five years. Economists warned the weekly figures can be volatile, however, and some dismissed them as an aberration.
A $4.5 billion cash offer from Bristol-Myers Squibb Co. for its cancer drug partner ImClone Systems Inc. kept the Nasdaq composite index from falling as sharply as other indexes. In other positive news, oil prices declined, and an index of Midwestern business activity indicated growth.
But Wall Street could not shake off its worries about the economy -- particularly after sobering remarks from Former Federal Reserve Chairman Alan Greenspan on CNBC late in the afternoon. Greenspan said he would be more surprised if the United States did not enter recession than if it did.
The Dow Jones industrial average fell 205.67, or 1.78 percent, to 11,378.02, continuing its string of erratic, triple-digit daily swings.
Broader stock indicators also declined.
The Standard & Poor's 500 index fell 16.88, or 1.31 percent, to 1,267.38, while the Nasdaq fell 4.17, or 0.18 percent, to 2,325.55.
During the month of July, the Dow inched up 0.25 percent, the S&P fell 0.99 percent, and the Nasdaq rose 1.42 percent. It was certainly a better showing than in June, during which the Dow dropped 10.19 percent, the S&P fell 8.60 percent, and the Nasdaq lost 9.10 percent.
Declining issues outpaced advancers by about 3 to 2 on the New York Stock Exchange, where volume came to 1.45 billion shares.
The Russell 2000 index of smaller companies fell 4.34, or 0.60 percent, to 714.52.
Bond prices jumped following the economic readings. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.95 percent from 4.05 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices rose.
Light, sweet crude fell $2.69 to settle at $124.08 a barrel on the New York Mercantile Exchange after rising more than $4.50 on Wednesday. Oil has fallen more than $20 since hitting a high above $147 on July 11, raising hopes that inflation pressures could ease.