- The Washington Times - Wednesday, September 2, 2009

Wall Street stocks fell sharply Tuesday, the third straight day of losses amid investor concerns that slow economic growth will not support the markets’ six-month rally.

The Dow Jones Industrial Average closed at 9,310.60, down 185.68 points. The broader Standard & Poor’s 500 Index closed at 998.04, down 22.58 points, and the tech-heavy Nasdaq Composite Index closed at 1,968.89, down 40.17 points. The losses translate to a roughly 2 percent drop in major markets in the United States and abroad.

Stock prices have rallied more than 50 percent since hitting 12-year lows in early March, largely based on corporate earnings that reflect cost cutting, not growth.

The drop Tuesday “tells us the rosy scenario is priced into the markets and we need more evidence of top-line growth,” said Brian Lipps, a Charles Schwab & Co. Inc. branch manager in Alexandria and Washington.

The markets dropped despite an Institute for Supply Management report showing that U.S. manufacturing increased in August for the first time since January 2008 and a National Association of Realtors report showing pending home sales increased 3 percent in July, the sixth straight monthly gain.

Bond prices rose as investors tried to protect their money by switching from stocks to government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.37 percent from 3.40 percent late Monday.

Oil prices also fell despite the upbeat manufacturing report. The price of light crude closed down $1.91, to $68.05 a barrel, on the New York Mercantile Exchange.

The dollar fell against other major currencies while gold prices increased.

Tuesday’s stock market plunge is in keeping with historical data that show September is the worst month for Wall Street.

Mr. Lipps said any impact that stimulus money had on the markets also was priced long ago and that he doesn’t believe in a September curse - at least not on the month’s first day of trading.

Of the 30 stocks that make up the Dow industrials, only Wal-Mart Stores Inc. rose.

In overseas trading, Japan’s Nikkei stock average gained 0.36 percent, while Britain’s FTSE 100 dropped 1.82 percent, Germany’s DAX dropped 2.51 percent, and France’s CAC-40 dropped 1.92 percent.

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