Wall Street declines on global economic worries
The Commerce Department gave the market just modest comfort when it said orders for manufactured products rose by 1.3 percent in July. The figure was higher than the 0.8 percent predicted by economists polled by Thomson Financial/IFR; the department also upwardly revised its June reading to an increase of 2.1 percent.
However, the report was shrugged off by many traders as old news, given that it is now early September. And with automakers releasing sluggish August sales and the Labor Department anticipated to report another drop in U.S. payrolls on Friday, trading was marked by caution.
A massive pullback in commodities since earlier in the summer has helped alleviate some of the market's inflation worries. Oil slid below $109 a barrel Wednesday as the dollar strengthened and Hurricane Gustav appeared to leave oil installations in the Gulf of Mexico largely undamaged.
But investors are realizing that oil is also falling because demand growth around the world appears to be waning — bad news for not only energy companies, but also for the technology and industrial sectors. On Tuesday, stocks gave up a huge early advance only to close lower, as investors' enthusiasm about oil's selloff dissipated and gave way to concerns about the economy in the United States and abroad.
In early afternoon trading, the Dow Jones industrial average fell 36.31, or 0.32 percent, to 11,480.61, after moving in and out of positive territory.
Broader stock indicators also dropped. The Standard & Poor's 500 index fell 7.48, or 0.59 percent, to 1,270.10, and the Nasdaq composite index fell 16.03, or 0.68 percent, to 2,333.21.
Bond prices moved higher Wednesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.70 percent from 3.74 percent in late trading on Tuesday.
The big economic headline of the week for Wall Street is likely to be the Labor Department's reading on August employment. The report is expected to show a drop in payrolls for the eighth straight month and another uptick in the unemployment rate.
Many companies relying on consumer demand have been hurting.
Corning Inc. fell $2.02, or 10.4 percent, to $17.48 after reducing its third-quarter sales and earnings-per-share outlook to reflect slower shipments of glass used in flat-screen televisions and computers.
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