Wall Street has worst day in 3 months as 4Q begins

Written by Reuters
Friday, 02 October 2009 07:00

NEW YORK: The Dow and S&P 500 suffered their worst one-day fall in three months on Thursday, Oct 1 after economic reports fueled fears about the recovery's strength, according to Reuters.

The pullback occurred a day after stocks ended the third quarter with strong gains, with the Dow and S&P each up 15 percent from the previous quarter.

Cyclical stocks, which are sensitive to the economy's cycles, were among the worst performers, including TECHNOLOGY [] and bank shares.

The KWB bank index dropped 5 percent while an index of semiconductors fell 4.8 percent. Airlines also fell sharply, with an airline index down 8.3 percent.

The Institute for Supply Management's index of national factory activity declined in September from August's reading, and although the latest reading still indicated growth, it was sharply below economists' forecast in a Reuters poll.

Data on jobless claims also was worse than expected.

"There was disappointment from the ISM this morning. It missed expectations," said Mike O'Rourke, chief market strategist at BTIG in New York.

"With the last quarter ending, a lot of people were holding stuff up for window dressing and now you're seeing profit-taking," he added. "We've had a tremendous run up."

Analysts said the news added to anxiety ahead of Friday's September jobs report from the government, the month's biggest data release.

The Dow Jones industrial average tumbled 203.00 points, or 2.09 percent, to end at 9,509.28. The Standard & Poor's 500 Index slid 27.23 points, or 2.58 percent, to 1,029.85. The Nasdaq Composite Index lost 64.94 points, or 3.06 percent, to 2,057.48.

It was the third straight day of declines for stocks and the Nasday's worst fall since June 22, just before the market suffered a modest pullback.

All 30 Dow components finished in the red, with the Dow's biggest decliners including JPMorgan Chase & Co, down 5.6 percent at US$41.37, and Boeing Co, down 3.8 percent at US$52.11.

Bank of America Corp shares slipped 4.2 percent to US$16.21 after Chief Executive Ken Lewis said he was retiring after months of being dogged by a series of government investigations into the company's acquisition of Merrill Lynch. The company did not name a successor. The news was announced late on Wednesday.

Heavy equipment maker Caterpillar, down 3.7 percent at US$49.45, also ranked among the Dow's biggest decliners. - Reuters