Slide in manufacturing activity sends stocks lower

Published October 1, 2009 by TNJ Staff
Business

Stocks began the fourth quarter on a down note Thursday, falling sharply amid more signs that the economy’s recovery will be slow and bumpy.

Major stock indicators fell more than 1 percent in morning trading after disappointing reports on the manufacturing industry and the labor market overshadowed good news on housing and consumer spending.

The Institute for Supply Management said its index of manufacturing activity in September slipped to 52.6 from 52.9 in August, well below analysts’ expectations of 54. It was the second month in a row the reading came in above 50, which indicates growth, after contracting for 18 months.

Earlier Thursday, the Labor Department said new claims for jobless benefits rose more than expected to 551,000, evidence that the labor market is still struggling and that jobs remain scarce. Economists polled by Thomson Reuters had predicted claims to rise to 535,000.

The increase came after three weeks of declines, and a day before the Labor Department’s closely watched monthly report on employment. Economists expect that the unemployment rate rose to 9.8 percent in September from 9.7 percent in August.

Better reports on housing and consumer spending weren’t enough to stem the stock market’s losses.

Several economic reports this week raised doubts among investors about the strength of the recovery and whether this year’s powerful stock market rally should continue. The Dow Jones industrial average lost nearly 30 points Wednesday, as a disappointing report on Midwestern manufacturing contributed to the bearish tone.

Despite ending on a wobbly note in September, stocks still put in a stellar third quarter. Both the Dow Jones industrials and the Standard & Poor’s 500 index gained 15 percent. It was the Dow’s best three-month period since the fourth quarter of 1998.

The Dow fell 113.37, or 1.2 percent, to 9,598.91. The Standard & Poor’s 500 index fell 14.11, or 1.3 percent, to 1,042.97, and the Nasdaq composite index dropped 33.83, or 1.6 percent, to 2,088.59.

Copyright 2009 The Associated Press.

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TNJ Staff