Stocks Fall As Market Awaits Data

AP
Friday February 22, 12:28 pm ET
By Tim Paradis, AP Business Writer
Stocks Fall for Second Session As Investors Await Economic Figures for Hints on Economy


NEW YORK (AP) -- Stocks fell Friday as investors with little news to trade on after Thursday's pullback kept selling ahead of economic figures due next week. The Dow Jones industrial average lost more than 100 points.


Investors seemed to be looking at corporate news as they awaited reports on existing home sales and durable goods set to arrive next week, but found few reasons to buy.

The market's decline follows a sell-off Thursday that left the Dow down more than 140 points, or 1.15 percent. Investors worried about a weaker-than-expected reading on regional manufacturing from the Federal Reserve Bank of Philadelphia as well as another drop in the Conference Board's monthly index of leading economic indicators.

"I think what really still seems to be dragging the market down are some of the those manufacturing numbers," said Ryan Detrick, strategist at Schaeffer's Investment Research in Cincinnati, referring to the Philadelphia Fed number as well as another regional manufacturing report from the New York Fed last week. "It just shows that the fears that the U.S. economy is in recession are continuing to dominate."

In midday trading, the Dow fell 109.50, or 0.89 percent, to 12,174.80.

Broader stock indicators also lost ground. The Standard & Poor's 500 index fell 13.55, or 1.01 percent, to 1,328.98, and the Nasdaq composite index slid 31.78, or 1.38 percent, to 2,268.00.

Declining issues outnumbered advancers by more than 2 to 1 on the New York Stock Exchange, where volume came to 534.5 million shares.

Bond prices rose as stocks declined. The yield on the 10-year Treasury note, which moves opposite its price, fell to 3.74 percent from 3.78 percent late Thursday. The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude for April delivery rose 68 cents to $98.91 on the New York Mercantile Exchange.

Wall Street has faced renewed concerns after a stream of mostly weak economic data in recent weeks has raised questions about whether the Federal Reserve will be able to fend off recession. There are also some fears the U.S. may be entering a period of stagflation for the first time since the 1970s. Stagflation brings slowing growth and rising inflation.

Investors have at times found reassurance from the central bank's statements that it will lower rates as needed, but that expectation hasn't been enough to shore up confidence in the stock market for more than brief periods. Wall Street remains concerned that the economy could be so weak that rate cuts, which take months to work their way through the economy, won't stave off a further slowdown.

The Fed's next rate-setting meeting is scheduled for March 18. Policymakers lowered key interest rates a half-point to 3 percent on Jan. 30, following an emergency three-quarter point cut the previous week.

Detrick said that among the reports due next week, investors will be looking to readings on producer prices -- a key measure of inflation -- as well as on consumer sentiment. He noted that recent consumer confidence figures, which have been weak, added to Wall Street's concerns that hesitant consumers could pare their spending.

A pullback among buyers is an unwelcome prospect for investors as about two-thirds of U.S. economic activity is tied to consumer spending.

In corporate news, Merrill Lynch lowered its ratings on government-sponsored lenders Freddie Mac and Fannie Mae to "sell," contending the companies face continued headwinds amid the credit crisis.

Freddie Mac fell $2.33, or 8.4 percent, to $25.42, while Fannie Mae declined $1.55, or 5.4 percent, to $27.44.

Software maker Intuit Inc. fell $3.67, or 12.3 percent, to $26.12 after posting a 21 percent decline in second-quarter profit late Thursday.

The Russell 2000 index of smaller companies fell 11.96, or 1.72 percent, to 684.32.

Overseas, Japan's Nikkei stock average closed down 1.37 percent. Britain's FTSE 100 fell 0.74 percent, Germany's DAX index closed down 1.43 percent, and France's CAC-40 dropped 0.71 percent.

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com