Dow at 9,719, down 55 points this morning.
NEW YORK (AP) — Stocks began the third quarter with more selling
after disappointing reports on jobs, housing and manufacturing
deepened concerns about the economy.
The Dow Jones industrial average fell about 60 points in afternoon
trading Thursday. The dollar slid while interest rates fell as
demand for Treasurys grew.
The weaker economic numbers followed a bad second quarter for
investors and came a day ahead of the government’s June jobs
report. That’s an important date on investors’ calendars because a
rebound in jobs is needed for the economy to recover.
The government said initial claims for jobless benefits rose by
13,000 last week to 472,000. Economists had forecast a drop. The
report comes a day after payroll company ADP said private employers
didn’t ramp up hiring as much as expected last month.
Initial claims have remained well above the levels economists
believe would indicate strong jobs growth. Many employers remain
reluctant to hire because of worries about the pace of the
recovery.
The market extended an early drop after the National Association of
Realtors said in morning trading that the number of buyers who
signed contracts to purchase homes fell to a new low in May
following a rush of purchases to meet an April 30 tax credit
deadline.
The Institute for Supply Management came out at the same time with
downbeat news about manufacturing. The trade group said its
manufacturing index fell in June but that the industry still
appears to be growing. Still, the drop from May was steeper than
analysts had expected. Manufacturing has been one of the strongest
parts of the economy in the past year so investors don’t want to
see it weaken.
The stock market has been sliding on concerns about the economy
since hitting its 2010 high in April. Investors are worried that
they were too quick to bet on a rebound after major indexes plunged
to 12-year lows in March 2009. The reports Thursday provided more
signals that the recovery will take longer than hoped.
John Canally, economist at LPL Financial in Boston, said traders
were so scarred by the market’s crash in 2008-09 that they see a
slowdown as a sign that the economy is going to falter again rather
than just recover more slowly.
“You see this almost every time 12-15 months after the end of a
recession. You hit sort of a soft spot,” Cannaly said.
Canally said the likelihood of a so-called “double dip,” in which
the economy begins to shrink again, has risen in the past month to
about 20 percent from 10 percent. He said investors are far more
pessimistic. “I would say the market is now over 50” percent, he
said.
In early afternoon trading, the Dow fell 58.34, or 0.6 percent, to
9,715.60. It had been down as much as 108 points in late morning
trading.
The broader Standard & Poor’s 500 index fell 6.09, or 0.6 percent,
to 1,024.62, and the Nasdaq composite index fell 14.92, or 0.7
percent, to 2,094.32.
The Dow dropped 10 percent for the April-June quarter, while the
S&P 500 index fell 11.9 percent.
With the market so unsettled, investors are giving up potential big
gains in stocks and opting for the smaller but safer gains that can
be made in bonds.
The yield on the benchmark 10-year Treasury note, which moves
opposite its price, fell to 2.92 percent from 2.94 percent late
Wednesday. Its yield fell below 3 percent this week for the first
time in more than a year, a sign bond investors are concerned the
economy could slip back into recession.
About three stocks fell for every one that rose on the New York
Stock Exchange, where volume came to 764 million shares compared
with 504 million traded at the same point Wednesday.
The Russell 2000 index of smaller companies fell 8.98, or 1.5
percent, to 600.51.
Britain’s FTSE 100 dropped 2.3 percent, Germany’s DAX index fell
1.8 percent, and France’s CAC-40 lost 3 percent. Japan’s Nikkei
stock average fell 2 percent.
