Stocks Slide as Ford Sales Miss Target
Stocks resumed their descent Tuesday after a brief pop from a better-than-expected ISM report on manufacturing.
The Dow Jones Industrial Average was down more 100 points, or more than 1.5 percent. The S&P 500 and Nasdaq also fell sharply.
The Institute for Supply Management reported its manufacturing index rose to 52.9in August from 48.9 in July. Any reading over 50 indicates expansion, and this marks the gauge's first return to since January 2008.
Economists pointed out that the ISM jump was largely due to the Cash for Clunkers program and businesses replenishing their inventories, and that consumer demand doesn't warrant manufacturing at these levels.
Ford reported its sales rose 21.2 percent in August, helped by Clunkers, but were well short of the 40 to 50 percent analysts had expected. Its shares fell more than 4 percent.
Other automakers will report sales as the afternoon goes on.The industry is expected to show its first year over year gain in nearly two years, boosted by Clunkers.
Among the morning's other economic news, pending-home sales jumped 3.2 percent in July to their highest level since June 2007. It was the sixth straight increase and better than the 2-percent rise economists had expected.
And construction spending slipped 0.2 percent in July, worse than the flat reading economists had expected. This came after a 0.1-percent uptick in June.
As the calendar flips to September, investors will look back on August fondly, the last two trading sessions notwithstanding.
August marked the sixth consecutive month of gainsfor both the S&P 500 and the Nasdaq, and the fifth positive month for the Dow out of six. The Dow and the S&P 500 had their best Augusts in nine years, and the S&P has now gained almost 39 percent over the past six months.
EBay shares rose after the company confirmed that it has agreed to sell its Skype Internet-calling service for $2.75 billion to an investor group led by Silver Lake. EBay will get $1.9 billion in cash and retain a 35-percent stake in the company.
Yahoo shares were flat following news that investor Carl Icahn cuts his stake in the company to 4.48 percent from 5.45 percent.
Battered commercial mortgage lender CIT Group was in the spotlight once again after the company said it would fail to make a Sept. 15 interest payment on notes due in 2067.
The air also continued to come out of the meteoric rally in AIG shares, which more than tripled in August.
Bank of America rose after the bank said it wants to repay part of its government bailout.
- Peter Schacknow contributed to this report.