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Stocks fall again as economic outlook dims; Dow drops 119
The government's GDP report today is expected to see growth at a 3.3% rate.
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NEW YORK - Signs of a weaker housing market and a gloomier outlook on the economy gave investors more reasons to dump stocks.
Major market indexes fell by the largest amount in about a month Wednesday after the Commerce Department said new home sales dropped for the first time in five months. Sales slid 3.6 percent in September to 402,000. Analysts had expected an increase.
The Dow Jones industrial average lost 119 points, or 1.2 percent, in its third straight triple-digit drop.
The Nasdaq composite index fell 2.7 percent, while the Russell 2000 index of smaller companies tumbled 3.5 percent. Many of the stocks in both indexes are considered more risky in a tough economy and so they suffered some of the biggest losses.
The retreat came as Goldman Sachs Group Inc. reduced its expectation for the nation's economic output for the July-September period. Goldman Sachs predicts third-quarter gross domestic product rose at an annual rate of 2.7 percent, weaker than its earlier forecast of 3 percent.
GDP report due
The government's report on third-quarter GDP is due today. Economists are looking for growth at an annual rate of 3.3 percent after a record four straight quarters of contraction.
The day's slide signaled that investors were reassessing their hopes for a recovery in the economy. Demand for safe-havens like Treasurys rose, as did shares of firms whose business is expected to fare better in a slump. Stocks of consumer staples companies edged higher.
Energy, financial and retail stocks posted some of the biggest losses.
Analysts said the market's slide in the past week isn't surprising given the size of the advance in the past eight months and mixed economic readings.
"I'm not panicked at the moment," said Manny Weintraub, president of Integre Advisors in New York. "I don't think anyone expected a super robust recovery."
Down, down, down
Stocks struggled Tuesday after a disappointing report on consumer confidence stirred worries about the coming holiday shopping period.
Wednesday's drop was the biggest for stocks since Oct. 1.
The Dow fell 119.48, or 1.2 percent, to 9,762.69. The index is down in five of the past seven days.
Broader indexes fell for a fourth straight day, the longest streak of losses in about a month.
The Standard & Poor's 500 index slid 20.78, or 2 percent, to 1,042.63. The Nasdaq dropped 56.48, or 2.7 percent, to 2,059.61.
The Russell 2000 index fell 20.63, or 3.5 percent, to 566.36.
The S&P 500 index is up 54.1 percent from a 12-year low in March, though it is down 5 percent since the start of last week, when it finished at its highest level in more than a year. The biggest slide since the market began rebounding eight months ago was a 7 percent slide from mid-June to mid-July.
Crude oil fell $2.09 to settle at $77.46 per barrel on the New York Mercantile Exchange.
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