NEW YORK >> A string of reminders that the economy is still struggling as well as disappointing earnings at Exxon Mobil irked investors today, and pushed stocks sharply lower. The Dow Jones industrials tumbled nearly 230 points, their first triple-digit loss in nearly two weeks. Weak economic data
sinks stocksBy Amy Baldwin
Associated Press
The discouraging economic data -- a drop in construction spending and a weak reading of national business activity -- came a day after an unexpectedly steep decline in gross domestic product in the second-quarter.
The losses also came as investors were beginning to feel that the market had suffered its worst days and that prices were low enough for them to start buying again.
"You give them a little bit of hope and now it looks like it is being jerked away again," said Richard A. Dickson, a technical analyst at Hilliard Lyons in Louisville, Ky.
Declining issues outnumbered advancers slightly more than 3 to 2 on the New York Stock Exchange. Volume was moderate. The Dow closed down 229.97, or 2.6 percent, at 8,506.62, according to preliminary calculations.
It was the blue chip index's first triple digit decline since July 22 when it fell 234. Since that loss, the Dow had two 400-plus surges -- 488.95, its second-biggest daily point gain ever, on July 24, and 447.49 on Monday, its third-largest daily point gain. Those advances were mostly responsible for a four-session advance of 1,009.
The broader market also pulled back. The Nasdaq composite index dropped 48.10, or 3.6 percent, to 1,280.16. The Standard & Poor's 500 index fell 27.06, or 3 percent, to 884.56. The Russell 2000 index fell 3.22, or 0.8 percent, to 389.20.
The price of the Treasury's 10-year note was up 9/16 point today, while its yield fell to 4.39 percent from 4.46 percent late yesterday. Two-year Treasury notes were up 7/32 point and yielded 2.12 percent, down from 2.23 percent yesterday.
Today's decline built on more than 10 weeks of selling based on fears about the economy and a loss of confidence in corporate America. The Securities and Exchange Commission is investigating an array of energy and telecommunications companies and their executives because of deceptive accounting practices.
"If the economy is slowing down, and earnings don't hold up, many feel their equity exposure right now is still too high even at lower (stock price) levels," said Alan Ackerman, executive vice president at Fahnestock & Co. "How cheap is cheap, and how daring to investors want to be with so much uncertainty ahead?"
Investors were disheartened by two economic reports indicating that the economy is still weak. Analysts said that the reports also increased concerns that the economy, which had appeared to be recovering, has instead slid into a deeper recession, called a double-dip.
"There are worries now that we are in a double-dip (recession) ... . If that is the case, you have a market that is still pretty richly valued," Dickson said.
The Commerce Department said that construction spending dipped 2.2 percent in June, missing analysts' expectations for a 0.3 percent rise. And the Institute for Supply Management said its gauge of business activity stood at 50.5 in July, well short of the 55 reading analyst were anticipating.
Investors were also reminded today of their concerns about corporate ethics as two former WorldCom executives surrendered to face federal charges related to a multibillion accounting fraud at the bankrupt telecom. Former chief financial officer Scott Sullivan and former controller David Myers turned themselves in to the FBI this morning.
Oil stocks were among the market's biggest losers with Exxon Mobil, a Dow stock, falling $2.76 to $34 on second-quarter earnings that missed analysts' expectations by 7 cents a share. Disappointing profits also pulled down Royal Dutch, which slid $3.49 to $42.21. Financial issues suffered from a Merrill Lynch downgrade of Dow industrial American Express, which itself fell 93 cents to $34.33.
Technology also contributed to the market's decline. Software maker Adobe Systems plunged nearly 30 percent, down $7.13 at $16.83, after lowering its third-quarter earnings and revenue estimates. Additionally, several brokerages, including UBS Warburg, Goldman Sachs and Merrill Lynch, downgraded Adobe shares.
Overseas, Japan's Nikkei stock average finished down 0.9 percent. Stocks fell sharply in Europe where France's CAC-40 sank 5.1 percent, Britain's FTSE 100 dropped 4.8 percent and Germany's DAX index lost 2.5 percent.