Dow so far down 124 points, to 10,111
NEW YORK (AP) — Stocks fell sharply Thursday as investors
absorbed more evidence of a troubled economy.
The Dow Jones industrial average tumbled 150 points following
disappointing reports on employment and orders for big-ticket
manufactured goods. A lower forecast from technology maker Qualcomm
Inc. dragged the Nasdaq composite index lower.
The market also fell in response to a report from Standard & Poor’s
that said it no longer considers Britain among the “most stable and
low-risk” banking systems. The report drove the dollar higher as
investors sought safety. That sent some commodities prices lower,
hurting materials stocks.
The S&P report was yet another worry for investors who have
been focused on politics, not the economy.
President Barack Obama’s plan to overhaul banking regulations and
restrict trading at large financial institutions spooked the market
over the past week. The possibility Federal Reserve Board chairman
Ben Bernanke wouldn’t be confirmed for a second term also had
investors on edge, though those worries have subsided.
“Our full-contact politics is really beginning to affect the
markets as it’s migrating into subjects that investors care deeply
about like who is our Fed chairman going to be,” said Lawrence
Creatura, portfolio manager at Federated Clover Investment
Advisors. “That wasn’t uncertain two weeks ago. Now it is.”
The Senate scheduled a vote Thursday to determine whether Bernanke
can win approval from at least 60 senators to defeat a filibuster
aimed at preventing his reappointment. His term ends Sunday. Senate
leaders from both parties said he would be reappointed.
During his State of the Union address Wednesday night, Obama
avoided talking about the banking overhaul plan. Uncertainty over
details of how that plan might be enacted and how strong trading
restrictions would be had helped push the market to its worst
three-day stretch since stocks bottomed last March.
Focus on the economy is creeping back to the forefront. The Fed
said Wednesday afternoon it would keep interest rates at historic
lows and the economy was showing signs of improvement. That helped
stocks reverse a slide to end higher.
The Labor Department said weekly jobless claims fell by less than
expected last week and the Commerce Department reported durable
goods orders didn’t rise as fast as anticipated last month,
providing a reminder the economic recovery is likely to be
slow.
In midday trading, the Dow fell 153.11, or 1.5 percent, to
10,083.05. The Standard & Poor’s 500 index fell 15.29, or 1.4
percent, to 1,082.21, while the Nasdaq fell 45.86, or 2.1 percent,
to 2,175.55.
Stocks have fallen five of the past eight days.
Tech shares were broadly lower after Qualcomm, which makes chips
and other technologies used in cell phones, fell $6.39, or 13.5
percent, to $40.81 after it said it expects a “subdued” rebound in
the economy and reduced its full-year sales forecast.
Bond prices were mixed. The yield on the benchmark 10-year Treasury
note, which moves opposite its price, rose to 3.67 percent from
3.66 percent late Wednesday.
The dollar rose against other major currencies, while gold
fell.
Crude oil fell 9 cents to $73.58 per barrel on the New York
Mercantile Exchange.
In economic news, new requests for unemployment benefits fell
modestly, dropping to 470,000 last week. Economists polled by
Thomson Reuters had been expecting a bigger drop to 450,000 new
unemployment filings.
Orders to U.S. factories for big-ticket manufactured goods rose
less than expected in December, increasing just 0.3 percent.
Economists had been expecting a 2 percent increase in orders.
For all of 2009, durable goods orders — items expected to last at
least three years — tumbled 20.2 percent. It was the largest drop
on records that go back to 1992.
On Friday, the government releases its initial reading on
fourth-quarter gross domestic product. The GDP number, which
measures the entire country’s economic output, likely rose at an
annualized rate of 4.5 percent during the final three months of
2009.
Ford Motor Co. said it recorded a profit in 2009 — its first annual
profit in four years. The auto maker, which avoided bankruptcy and
government bailout money, said it expects to again be profitable in
2010. Ford slipped 6 cents to $11.49.
About four stocks fell for every one that rose on the New York
Stock Exchange, where volume came to 398 million shares.
The Russell 2000 index of smaller companies fell 12.05, or 2
percent, to 606.33.
In afternoon trading, Britain’s FTSE 100 fell 1.4 percent,
Germany’s DAX index dropped 1.8 percent, and France’s CAC-40 fell
1.9 percent. Earlier, Japan’s Nikkei stock average rose 1.6
percent.
