Closing Market Report

Star-Bulletin news services

Dow posts another
triple-digit loss

By Lisa Singhania
Associated Press

NEW YORK >> Wall Street's hopes for a turnaround dimmed today after another dose of disappointing economic news sent the Dow Jones industrials down nearly 270 points, their third straight triple-digit loss.

The selling, which followed the latest disappointing economic report, came after 11 weeks of heavy selling and eroded much of July's huge, but short-lived, rally. Analysts said that in the absence of any encouraging economic data, there was little reason for investors to do much buying. Doubts about the banking sector also pressured stocks.

Declining issues led advancers 3 to 1 on the New York Stock Exchange. Volume was brisk. The Dow closed down 269.50, or 3.2 percent, at 8,043.63, for a three-session loss of 692.96 points.

Broader stock indicators also fell. The Standard & Poor's 500 index lost 29.64, or 3.4 percent, to 834.60, and the Nasdaq composite index dropped 41.91, or 3.4 percent, to 1,206.01 -- a new 5-year low. It last closed lower on April 21, 1997, when it stood at 1,203.95. The Russell 2000 index fell 9.33 to 367.12.

The price of the Treasury's 10-year note was up 19/32 point today, while its yield fell to 4.22 percent from 4.29 percent late Friday. Two-year Treasury notes were up 3/16 point and yielded 1.90 percent, down from 2 percent late Friday.

Today's selling followed a report from the Institute for Supply Management that showed the U.S. service sector grew in July, but at a slower pace than many economists had predicted. The group's non-manufacturing index stood at 53.1 in July, after standing at 57.2 in June and 60.1 in May.

The news compounded a string of lackluster economic reports released late last week -- including a weaker-than-expected gross domestic product, disappointing outlooks for business and manufacturing and flat unemployment figures -- that raised fears that the economy was slipping back into recession.

More fighting in the Middle East, as well as concerns about the fiscal situation in Latin America, added to the uncertainty. Uruguay received $1.5 billion from the U.S. Federal Reserve today to help its ailing financial system. Brazil reportedly is seeking about $10 billion in similar assistance.

Investors viewed the turmoil as one more reason to lock in profits from the market's late-July rally, which is fading quickly. At today's close, only about 340 points remained of the 1,009-point rally that Dow racked up between July 24 and July 29.

"There hasn't been any stimulus to help the markets forward. So it's understandable that we're giving up ground," said Larry Wachtel, a market analyst at Prudential Securities. "We're doing it grudgingly. But the trend is still downward. I don't see anything that's going to rescue it."

Procter & Gamble fell $2.40 to $87.44 despite fourth-quarter results that exceeded Wall Street's expectations, but failed to impress investors who had hoped for more.

Financial stocks were also lower. Citigroup slid $2.23, or 7.2 percent, to $28.65 following a cautious note about the company's prospects from Lehman Brothers.

Among tech stocks, Texas Instruments dropped $1.77 to $18.20. Cisco Systems, which is expected to report earnings after the market closes Tuesday, tumbled 53 cents, or 4.5 percent, to $11.36.

Overseas, Japan's Nikkei stock average fell almost 1.0 percent. In Europe, Germany's DAX index slipped 5.7 percent, Britain's FTSE 100 fell 1.9 percent, and France's CAC-40 dropped 4.0 percent.

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