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Stocks slide as investors continue sell-off
NEW YORK (AP) — Stocks fell moderately Friday as investors continued a sell-off that began a day earlier over worries about the pace of the recovery.
Investors are finding little reason to buy. There are no reports due out that could negate Thursday’s disappointing news that growth in the domestic economy continues to slow. The Dow Jones industrial average fell nearly 120 points in midday trading, a day after falling 144. Broader indexes also fell moderately Friday.
“We’re not seeing any significant growth prospects,” said Peter Costa, president of Empire Executions. “Why be in the market if there’s no (near-term) prospects for growth?”
Oil prices extended their slide on worries that future demand will wane if economic growth remains tepid. Energy stocks were among the worst performers on the day, including oil companies Chevron Corp. and ConocoPhillips.
Overseas markets also fell, reacting to reports Thursday that initial claims for unemployment benefits in the U.S. rose last week and manufacturing in the Mid-Atlantic region shrank.
“We’re probably on a continuation from yesterday’s disturbing claims number,” said Paul Zemsky, head of asset allocation at ING Investment Management. “There’s really nothing to hang your hat on.”
Earlier this year, traders were worried Europe’s economy would slow down so much that it would put a drag on a global recovery. Now, economic reports are making investors worry that the U.S. economy will slow worldwide growth.
Data have shown private employers are largely skittish about hiring new workers because they are unsure how strong business will be in the coming quarters. That, in turn, has people worried about their jobs and spending less. But until spending picks up, unemployment could remain high.
Analysts also have said employers have been reluctant to hire because they are uncertain about potential tax increases and costs from health care reform passed earlier this year.
The unemployment rate remains at 9.5 percent and analysts widely agree it needs to fall to lead to a stronger rebound.
In midday trading, the Dow fell 117.35, or 1.1 percent, to 10,153.71. The Standard & Poor’s 500 index fell 11.15, or 1 percent, to 1,064.48, while the Nasdaq composite index fell 18.37, or 0.8 percent, to 2,160.58.
About four stocks fell for every one that rose on the New York Stock Exchange, where volume came to 549.7 million shares.
Volume has been exceptionally low in recent weeks, which has added volatility to the market. But many stock options are expiring Friday, which could provide a lift.
In corporate news, Dell Inc. reported a better-than-expected profit Thursday, due largely to increased technology spending by businesses. However, sales in its consumer personal computer division were flat compared with the same quarter last year — further evidence that shoppers are hesitant to buy new goods.
Hewlett-Packard Co. reported quarterly results that were in line with preliminary results it released earlier in the month. Its profit rose 6 percent. Unlike Dell, it had growth in its personal computer sales.
HP fell $1.20, or 2.8 percent, to $39.56. Dell shares fell 14 cents to $11.90.
Corporate mergers and acquisitions activity gave stocks a boost early this week, but has been since overshadowed by weak economic reports. Mergers and acquisitions activity is usually seen as a hopeful sign for the economy because it means companies are willing to spend money, betting that their businesses and the economy will grow in the coming quarters.
Benchmark crude for October delivery fell $1.19 to $73.58 a barrel on the New York Mercantile Exchange. Oil prices have steadily dropped throughout August because of concerns that demand will drop if the global economic recovery slows.
Chevron fell $1.14 to $74.70. ConocoPhillips dropped $1.34, or 2.5 percent, to $53.37.
Bond prices traded in a tight range. The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.57 percent from 2.58 percent late Thursday. Its yield is often used to help set interest rates on mortgages and other consumer loans.
Overseas, Britain’s FTSE 100 fell 0.3 percent, Germany’s DAX index dropped 1.2 percent, and France’s CAC-40 fell 1.3 percent. Japan’s Nikkei stock average fell 2 percent.
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