Wall Street plunged today, sending the Dow Jones industrials down more than 340 points as retailers and the Labor Department added to the...
NEW YORK — Wall Street plunged today, sending the Dow Jones industrials down more than 340 points as retailers and the Labor Department added to the mountain of dismal economic news that has all but dashed investors’ hopes for a late-year recovery.
At the close, the Dow was down 344.65, or 3 percent, to 11,188.23. It was the worst drop for the blue-chip index since June 26, when it fell more than 358 points, or 3.03 percent.
Microsoft, one of the 30 Dow stocks, fell 55 cents to close at $26.35 a share. Boeing, also a Dow stock, tumbled $3.05, or 4.6 percent, to $63.03.
Broader indexes also tumbled. The Standard & Poor’s 500 index fell 42.15, or 3.3 percent, to 1,232.83, and the Nasdaq composite index dropped 74.69, or 3.2 percent, to 2,259.04.
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All three indexes are in bear market territory, defined as a 20 percent drop from a recent peak.
The market was already nervous as it waited for the government to release its August employment report on Friday. So news from the nation’s major retailers that shoppers curtailed their spending last month due to higher gas and food prices came as a heavy blow. Wal-Mart, the world’s largest retailer, beat expectations because of its big discounts, but many teen retailers and luxury chains did poorly, a sign that consumers are spending mostly on essentials and have put their discretionary buying on hold.
Meanwhile, the Labor Department said new applications for unemployment insurance rose by 15,000 from the previous week. That broadly missed expectations for a fourth-straight week of declines, heightening worries that the average American — already feeling the effects of the weak housing market — will have even less means to spend.
Furthermore, if the job market keeps deteriorating, it is tough for Wall Street to see a rebound in sight for the economy’s biggest culprit: the tumbling housing market.
“You have to have a paycheck to pay that mortgage,” said Craig Peckham, market strategist at Jefferies.
Investors are not expecting any promising news in the August jobs report, particularly after the ADP National Employment Report said that private-sector employment decreased in August by 33,000. Economists are predicting the government will report the eighth straight monthly drop in payrolls and a rise in the unemployment rate.
The market was so disheartened that it showed little reaction when the Institute for Supply Management said the service sector grew unexpectedly in July for the first time in three months as new orders increased and inflation moderated. The August reading of 50.6 was higher than the 50.0 expected, and the reading of 49.2 in July; but the sector’s edging above the threshold between contraction and expansion was hardly a sign of a robust economy.
An economic recovery appears to be far off to investors — and with the Dow down more than 15 percent for the year so far, they don’t appear to be holding out for a significant upturn in stocks, either.
“We’re seeing nothing but sellers,” said Ted Oberhaus, director of equity trading at Lord, Abbett. “In a bear market, you sort of really don’t need an excuse to sell.”