- The Washington Times - Friday, December 4, 2009

NEW YORK | Investors grew nervous about the shape of the economy Thursday, dumping stocks at the last minute ahead of Friday’s key government report on unemployment.

After a sleepy day of small back-and-forth trades, stocks began sliding in the last half-hour and the drop intensified in the final 20 minutes.

The Dow Jones Industrial Average ended off its lows but still posted a loss of 87 points. The wave of selling swept through the market like a brush fire and revealed how skittish investors remain.

While traders offered reasons behind the slide, each one suggested that investors remain on edge with worries about the pace of the economy’s recovery. Now in the final month of the year, investors are eager to preserve the gains they’ve made in 2009. When a torrent of selling hits, many investors would rather just step out of the market.

“When you get a sell-off like that at the end of the day it tells me that there’s no conviction in those buyers who are around,” said Joe Saluzzi, co-head of equity trading at Themis Trading LLC. “The nervous Nellies are out there and everyone had itchy trigger fingers.”

Worries about the economy dogged investors throughout the day following a weak snapshot of the service industry. The Institute for Supply Management said during morning trading that its index of activity in the service industry fell to 48.7 in November from 50.6 in October. That was below what analysts had been expecting and signaled contraction.

The market initially drew some support from a Labor Department report that new claims for unemployment benefits fell unexpectedly for the fifth straight week. The number of laid-off workers seeking unemployment benefits fell by 5,000 last week, in a hopeful sign of improvement in the job market.

Dan Cook, senior market analyst at IG Markets in Chicago, said he expects investors to hew toward safer investments as the end of the year approaches. He said he wasn’t surprised to see the late drop ahead of the jobs figures.

“To avoid the chance of getting crushed tomorrow, take a bit off the table today,” he said.

The Dow slid 86.53, or 0.8 percent, to 10,366.15, but is still down only 1 percent from a 14-month closing high on Tuesday.

The broader Standard & Poor’s 500 Index fell 9.32, or 0.8 percent, to 1,099.92, while the Nasdaq Composite Index fell 11.89, or 0.5 percent, to 2,173.14. The Russell 2000 Index of smaller companies fell 7.31, or 1.2 percent, to 588.78.

Bond prices fell, pushing yields higher, as investors fretted about increasing supplies of government debt. The yield on the benchmark 10-year Treasury note rose to 3.38 percent from 3.32 percent late Wednesday.

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