NEW YORK >> A spate of bad news about the economy, including sluggish productivity growth and disappointing retail sales, hit Wall Street hard today and sent stocks falling sharply. Economic news sinks stocks
By Amy Baldwin
Associated PressThe selloff more than offset the market's big advance from yesterday, which analysts had downplayed by attributing it to bargain hunters, not investors ready to commit to stocks.
"Everyone is definitely looking at the data on the economy, and they really want to see some glimmers of hope that we are going to get a pickup in profit growth. Without that happening so far, people are a little skittish," said Joseph Keating, chief investment officer at AmSouth Asset Management in Birmingham, Ala.
Declining issues outnumbered advancers 2 to 1 on the New York Stock Exchange, where volume was up over yesterday. The Dow Jones industrial average ended down 141.42, or 1.7 percent, to 8,283.70 after gaining 117.07 yesterday. Earlier today, the Dow slid 208 points.
The broader market also dropped sharply. The Nasdaq composite index fell 41.27, or 3.2 percent, to 1,251.04. The Standard & Poor's 500 index declined 14.24, or 1.6 percent, to 879.16. The Russell 2000 index fell 8.69, or 2.2 percent, to 381.06.
The price of the Treasury's 10-year note was up 7/16 point today, while its yield fell to 3.91 from 3.96 percent late yesterday. Two-year Treasury notes were up 5/32 point and yielded 1.92 percent, down from 2.01 percent yesterday.
Analysts said investors' are also nervous about the possibility of war with Iraq and the upcoming anniversary of the Sept. 11 terror attacks.
"I hate to use 9-11 as an excuse, but I think there is genuine apprehension and grief going into it," said Scott Bleier, president of Hybridinvestors.com.
Wall Street faced several disappointments today, including a report that productivity of U.S. companies grew at its slowest pace of the year during the second quarter. The Labor Department reported that productivity rose 1.5 percent. The reading was higher than the 1.2 percent analysts were expecting, but a sharp drop from 8.6 percent growth recorded in the first quarter.
In another report, new claims for unemployment insurance fell last week by a seasonally adjusted 8,000 to 403,000 after rising for three weeks in a row, the department said. Still, claims were at a level that indicates the labor market remains soft.
The number of unemployed people continuing to collect jobless benefits increased to 3.6 million for the week ending Aug. 24, the most recent period for which the information is available. That indicates that not a lot of hiring is going on.
Some economists predict that nation's unemployment rate -- now at 5.9 percent -- probably edged up to 6 percent in August. The government releases its latest snapshot on employment on Friday.
The Institute for Supply Management also had disappointing news, saying its non-manufacturing index for August stood at 50.9, below the 54.0 reading analysts were anticipating.
Orders to U.S. factories were up by 4.7 percent in July after falling by 2.5 percent in June, but the nation's retailers reported disappointing back-to-school sales in August as nervous consumers put away their pocketbooks.
The retail sales reports showed that department stores and mall-based apparel retailers were the hardest hit by the sour consumer mood. But even two hot discount chains -- Wal-Mart Stores Inc. and Target Corp. -- reported results below Wall Street expectations.
The Commerce Department reported that demand for big-ticket "durable" goods, such as cars, led the way in the July rebound, rising 9.2 percent, while orders for nondurables, such as food and clothes, dipped 0.3 percent.
The reports were a blow to investors yearning for evidence that the economy is strengthening and not, as some fear, slipping back into recession.
"Everyone is looking to see that there is some traction taking place in the economy. And, the data just continues to say we are not accelerating," Keating said.
Overseas, Japan's Nikkei stock average rose 1.6 percent Thursday. In Europe, France's CAC-40 declined 0.9 percent, Britain's FTSE 100 lost 0.4 percent, and Germany's DAX index fell 2.1 percent.