Closing Market Report
Star-Bulletin news services
|
Retail, jobless data send Dow down 344
By Madlen Read
Associated Press
NEW YORK » Dejected investors sent stocks plunging yesterday, hurtling the Dow Jones industrials down more than 340 points after retailers and the government added to a mountain of bad economic news and devastated hopes for a late-year recovery.
The market was already nervous as it waited for the government to release its August employment report today. So news from the nation's major retailers that shoppers curtailed their spending last month due to higher gas and food prices came as a heavy blow.
The U.S. Labor Department said new applications for unemployment insurance rose by 15,000 last week from the previous week.
That broadly missed expectations for a fourth-straight week of declines, heightening worries that the average American - already feeling the effects of the weak housing market - will have even less means to spend.
The market was so disheartened that it showed little reaction when the Institute for Supply Management said the service sector grew unexpectedly in August for the first time in three months as new orders increased and inflation moderated.
The August reading of 50.6 was higher than the 50.0 expected, and the reading of 49.2 in July; but the sector's edging above the threshold between contraction and expansion was hardly a sign of a robust economy.
The Dow fell 344.65, or 2.99 percent, to 11,188.23. It was the worst drop for the blue-chip index since June 26, when it fell more than 358 points, or 3.03 percent.
Broader indexes also tumbled. The Standard & Poor's 500 index fell 38.15, or 2.99 percent, to 1,236.83, and the Nasdaq composite index dropped 74.69, or 3.20 percent, to 2,259.04.
All three indexes moved back into bear market territory, defined as a 20 percent drop from a recent peak. The indexes were at highs, including a record 14,198.09 for the Dow.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.63 percent from 3.70 percent late Wednesday.
The Russell 2000 index of smaller companies fell 23.29, or 3.14 percent, to 718.62.
Declining issues outpaced advancers by about 5 to 1 on the New York Stock Exchange, where volume came to 1.30 billion shares.
After the government reported a lower-than-expected drop in U.S. gasoline and crude supplies, light sweet crude fell $1.46 to settle at $107.89 a barrel on the New York Mercantile Exchange. Crude is about $30 below its July 11 high of $147.27. Gold prices also slid yesterday.
The financial sector performed poorly yesterday after bond fund manager Bill Gross wrote in a commentary on his firm's Web site that the U.S. Treasury needs to provide funding to mortgage financiers Fannie Mae and Freddie Mac.
Freddie shares fell 30 cents, or 5.6 percent, to $5.08, and Fannie shares fell 65 cents, or 8.9 percent, to $6.67.
