tocks plummeted to their lowest close in nearly a month yesterday as the latest batch of data amplified concerns the economy is stuck in neutral.
The selloff was broad, with five stocks falling for every one rising on the New York Stock Exchange. Sectors most sensitive to growth were hit hardest.
Manufacturers 3M, United Technologies, and Boeing were the biggest drags on the Dow.
“I’m bearish on the economy, I’m bearish on the market at the moment,” said Kenneth
Polcari, NYSE floor trader and managing director at Icap Corporates. “The macro data for the last month-and-a-half has been nothing but negative.”
The Dow Jones industrial average dropped 144.33 points, or 1.39 per cent, to 10,271.21.
The Standard & Poor’s 500 Index fell 18.53 points, or 1.69 per cent, to 1,075.63 for its
lowest close since 21 July.
The Nasdaq Composite Index lost 36.75 points, or 1.66 per cent, to 2,178.95.
A report showing factory activity in the mid-Atlantic states contracted in August for the
first time since July 2009 blind-sided investors, who had been expecting activity to
increase. Earlier, the Labour Department said first-time claims for jobless benefits rose to a nine-month high.
Polcari noted that volume was low and pointed to a lack of participation by institutional fund managers, who he said were on the sidelines due to uncertainty about the economy. Volume on the NYSE Arca, Nasdaq and American Stock Exchanges was 7.97 billion, compared to last year’s daily average of 9.65 billion.
US Treasuries prices rose as investors moved out of riskier assets into safe-haven government debt, with the yield on the two-year Treasury note falling to a record low.
In the currency markets investors flocked to safe havens, such as the US dollar, yen and Swiss franc. Gold rose for a sixth day.
“Even the most optimistic people have to concede the economy at the very least has paused,” said Bill Strazullo, partner and chief investment strategist at Bell Curve Trading in Boston. The S&P 500 index fell back well below its 50-day moving average.