Stocks Slide on Economic Readings

AP
Friday February 15, 3:32 pm ET
By Tim Paradis, AP Business Writer
Stocks Decline As Lackluster Economic Readings Offer Little to Dislodge Wall Street's Fears

NEW YORK (AP) -- Stocks fell for second day Friday after lackluster economic reports offered investors little incentive to put down big bets ahead of a long weekend.

Concerns about the economy continued to simmer after readings on manufacturing, consumer confidence and import prices rendered fresh images of a struggling economy.

A New York Federal Reserve survey on regional manufacturing indicated that conditions have deteriorated this month, while the preliminary Reuters/University of Michigan survey on consumer sentiment for February showed a marked decline from the prior month. A Labor Department's report found that import prices have jumped amid higher oil prices.

Friday's market declines, while not severe, occurred a day after investors' revealed their skittishness about the economy and sent stocks down more than 1 percent. The pullback, which came after strong gains earlier in the week, followed somewhat downcast remarks about the economy from Federal Reserve Chairman Ben Bernanke.

With stock markets closed Monday for the President's Day holiday and fresh economic concerns, investors appeared uninterested in making any sizable moves.

"The fear factor still sits in the minds of investors," said Bill Schultz, chief investment officer at McQueen, Ball & Associates in Bethlehem, Pa. "We just can't get over that hurdle."

In late afternoon trading, the Dow Jones industrial average fell 59.99, or 0.48 percent, to 12,316.99.

Broader stock indicators also lost ground. The Standard & Poor's 500 index fell 3.71, or 0.28 percent, to 1,345.15, and the Nasdaq composite index fell 18.41, or 0.79 percent, to 2,314.13.

Government bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.77 percent from 3.82 percent late Thursday. The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude oil edged up 4 cents to settle at $95.50 a barrel on the New York Mercantile Exchange.

Not all economic findings that arrived Friday portended further weakness but over all, investors seemed unimpressed. The nation's central bank said that industrial output showed a modest increase last month, as expected, largely because of strength from utilities.

But investors remain worried that consumers who are uneasy will be reluctant to open their wallets -- an alarming prospect as consumer spending accounts for more than two-thirds of economic activity.

Comments from Bernanke on Thursday outlined the concerns. The Fed chief issued a sobering but not entirely unexpected prediction that economic growth in much of 2008 is likely to be "sluggish" before gathering strength later in the year. He told the Senate Banking Committee that further losses were likely at banks from soured mortgages.

Schultz predicts that volatility will remain on Wall Street as investors try to sort through their concerns about the financial sector. The uncertainty lapping at Wall Street is in part due to the opaque nature of subprime mortgage debt. Many of these loans, which are now going bad, were sold off in exotic debt packages whose worth is difficult to determine. The concerns about faltering debt have stoked worries about the solvency of bond insurers and sent some borrowing costs higher, disturbing normally staid parts of the financial sector that help pedal the economy.

In corporate news, Priceline.com Inc. said its fourth-quarter earnings more than doubled amid a 62 percent increase in gross travel bookings. The online travel company jumped $17.44, or 17 percent, to $119.67.

Declining issues outnumbered advancers by 2 to 1 on the New York Stock Exchange, where volume came to 1.13 billion shares.

The Russell 2000 index of smaller companies fell 6.84, or 0.97 percent, to 698.48.

Overseas, Japan's Nikkei stock average finished down 0.03 percent. Britain's FTSE 100 closed down 1.56 percent, Germany's DAX index fell 1.87 percent, and France's CAC-40 fell 1.79 percent.

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