Stocks slump on economic news
Stocks sagged Thursday 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 Friday.
“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.”
According to preliminary results, the Dow closed down 101.32, or 1 percent, at 10,334.16.
The broader gauges were also 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 11.86, or 1 percent, to 1,128.98.
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 Friday. 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.
Declining issues outnumbered advancers by almost 2 to 1 on the New York Stock Exchange.
The Russell 2000 index, which tracks smaller company stocks, was down 9.09, or 1.5 percent, at 582.43.
Overseas, Japan’s Nikkei stock average finished 0.3 percent higher. In Europe, France’s CAC-40 declined 0.5 percent, Britain’s FTSE 100 lost 0.9 percent and Germany’s DAX index closed 0.4 percent lower.