Stronger dollar, weak economic data pummels stocks

NEW YORK — A stronger dollar and more discouraging signs of a subdued economic recovery triggered a broad sell-off in stocks.

Major indexes tumbled more than 1 percent Thursday, including the Dow Jones industrials, which fell about 137 points.

Energy and material stocks showed the biggest losses as a jump in the dollar sent commodity prices tumbling. Meanwhile, an analyst's downgrade of the chip sector pulled technology shares sharply lower.

Analysts said the dollar was the biggest force behind Thursday's trading, as it has been in recent months. A stronger dollar makes commodities more expensive to foreign buyers, and companies that produce the commodities make less money from them.

"There might be a little fear out there about dollar strengthening, as well as some natural profit-taking opportunities," said Dan Cook, senior market analyst at IG Markets Inc. in Chicago. "We've been on an amazing run."

The stronger dollar also makes U.S. goods and services more expensive, and theoretically harder to sell, overseas. And U.S. companies that do business abroad make less money when their earnings are translated from other countries' currencies into dollars.

The latest data on the economy gave investors little incentive to hold on to stocks.

A private forecast of economic activity rose less than expected in October, signaling slow growth next year. The Conference Board said its index of leading economic indicators, which forecasts activity over the next six months, rose 0.3 percent last month, less than the 0.5 percent gain economists anticipated. The index climbed 1 percent in September.

There was also disappointing news on housing. The Mortgage Bankers Association said more than 14 percent of American homeowners with a mortgage were either behind on their payments or in foreclosure at the end of September. The industry group's quarterly report fed fears that a nascent recovery in the housing market could be upended by a continuing surge in loan defaults, especially as unemployment keeps rising.

Earlier Thursday, a report from the Labor Department said the number of newly laid-off workers seeking unemployment insurance was unchanged last week at 505,000, in line with expectations. But the figure remains above the level that would indicate the economy is adding jobs.

In early afternoon trading, the Dow fell 137.77, or 1.3 percent, to 10,288.54. The Standard & Poor's 500 index fell 18.74, or 1.7 percent, to 1,091.06, while the Nasdaq composite index fell 43.17, or 2.0 percent, to 2,149.97.