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NEW YORK >> Stocks sagged yesterday as lower-than-expected activity in the manufacturing sector and a slight rise in weekly jobless claims stifled investor enthusiasm after two days of gains. The Dow Jones industrials lost more than 100 points, while tech stocks fell on concerns about Intel Corp. and Yahoo! Inc.
The decline did not alarm analysts too much, as trading volume was lower ahead of the Independence Day weekend. After the market's muted reaction to a widely expected rise in interest rates on Wednesday, many investors were looking ahead to the government's monthly labor report, due today.
"I would not read too much into this weakness today, because there's a real lack of engagement overall," said Brian G. Belski, market strategist at Piper Jaffray. "I don't think there's any sense of urgency right now, today, ahead of the employment report, post the interest rate decision and in a holiday week, to put a lot of new money to work."
At the close of trading, the Dow had lost 101.32, or 1 percent, to 10,334.16.
The broader gauges also finished lower. The Nasdaq composite index sank 32.24, or 1.6 percent, to 2,015.55, largely on weakness in the semiconductor sector. The Standard & Poor's 500 index fell 11.90, or 1 percent, to 1,128.94.
The price of the Treasury's 10-year note closed up 18 point, while its yield fell to 4.56 percent from 4.59 percent Wednesday. Two-year Treasury notes rose 116 point and yielded 2.64 percent, down from 2.69 percent Wednesday.
The Labor Department found a slight rise in the number of people who signed up for jobless benefits last week; economists had forecast a decrease in claims. Wall Street was waiting for the government's monthly labor report, due today. Analysts expected to see 250,000 new jobs and a steady unemployment rate of 5.6 percent for June.
Separately, the Institute for Supply Management said its manufacturing index declined to 61.1 in June, down from 62.8 in May. The new reading was somewhat lower than the 61.5 forecast by analysts. Still, the gauge has been above 50 since June of last year, indicating that manufacturing activity is still in an expansion.
Investors reacted positively Wednesday to the Federal Reserve's move to raise rates by 0.25 percentage point -- the first hike in four years -- largely because the decision had been so widely expected. Now they are free to focus on corporate profits, but the prospect of a strong second quarter may be offset in the weeks ahead by continued anxiety about Iraq, inflation, terrorism threats and the presidential election.
Adding to inflationary worries yesterday, August crude oil futures surged 3 percent intraday, though at the end of the session they were down 15 cents at $38.59 a barrel.
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