Weak economic reports send stock indexes lower
NEW YORK — Weak reports on hiring and service industries sent the stock market sharply lower Wednesday, giving the Dow Jones industrial average its worst day in more than a month.
The Dow fell 111.66 points, or 0.8 percent, to 14,550.35, its worst decline since Feb. 25. The Standard & Poor's 500 index dropped 16.56 points, or 1.1 percent, to 1,553.69. Both indexes closed at record highs the day before.
The stock market started 2013 with a rally as investors became more optimistic about the economy, especially housing and jobs. The reports Wednesday disappointed the market and came two days after news that manufacturing growth slowed unexpectedly last month.
The losses were widespread. All 10 industry groups in the S&P 500 index fell. Banks and energy stocks had the worst losses, 1.7 percent and 1.6 percent. Utilities, which investors hold when they want to play it safe, fell the least, 0.3 percent.
“The market is overdue for a correction,” said Joe Saluzzi at Themis Trading. “I don't think that the economy supports this type of a rally.” Signs of investor skittishness appeared across a number of different markets.
Commodities slumped. Crude oil dropped $2.74, or 2.8 percent, to close at $94.45 a barrel and industrial metals like copper fell.
The yield on the 10-year Treasury note fell to 1.81 percent from 1.86 percent. The decline means investors are moving money into low-risk U.S. government debt.
The Russell 2000 index, which tracks small company stocks, fell for a third straight day, dropping 1.7 percent. It's now down 3.5 percent so far this week, far worse than the declines in the Dow, 0.2 percent, and the S&P, 1 percent. That's another signal that investors may be becoming more bearish about the economy.
Small company stocks, which did better than the Dow and the S&P 500 in the first three months of the year, are more sensitive to the outlook than the larger companies in the Dow and S&P. That's because they rely far more on domestic sales than global giants like IBM and Caterpillar, which sells heavy machinery and construction equipment around the globe.
The Dow Jones Transportation Average, an index of 20 stocks including airlines like Delta and freight companies FedEx and UPS, fell more than 1 percent for a third straight day. The index, which is regarded as a leading indicator for broader market indexes as well as the economy, has fallen 3.9 percent this week, after surging 17.9 percent in the first quarter.
Service companies kept growing at a solid pace in March, but the expansion was less than economists were expecting. The Institute for Supply Management's index of service companies fell to 54.4 from 56 a month earlier. The report was the weakest in seven months.
Separately, payrolls processor ADP reported that U.S. employers added 158,000 jobs last month, down from February's gain of 237,000. The ADP report is often seen as a preview for the government's broader survey on employment due on Friday.
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