Dow Drops Over 200; GE, Comcast Slide
Stocks tumbled Thursday after a disappointing ISM report on manufacturing piled on to worries about the economic recovery.
The Dow Jones Industrial Average lost 203 points, or 2.1 percent — it's worst decline since July 2, which was before the summer rally began. The S&P 500 fell 2.6 percent and the Nasdaq dropped 3.1 percent.
The Institute for Supply Management reported its gauge of manufacturing activity fell to 52.6 in September from 52.9 in August, short of expectations.
"This was a good report even if the 'what have you done for me lately' crowd tries to trash it," Joel Naroff of Naroff Economic Advisers, wrote in a note to clients. Still, "it looks like firms are leaning on productivity gains rather than hiring new workers to generate the added production," Naroff said.
That came after an earlier report showed initial jobless claims jumped by 17,000 last week, much more than expected. And ADP said private employers cut 254,000 jobs from their payrolls in September.
Employment is certainly on investors' minds ahead of the government's September jobs report, due out tomorrow before the bell. Economists surveyed by Reuters expect to see 180,000 jobs were dropped from nonfarm payrolls, after a loss of 216,000 in August.
The market shrugged off encouraging readings on housing and construction: Pending-home sales jumped 6.4 percentin August, the seventh straight month of gains. Economists had expected a gain of just 1 percent. Meanwhile, construction spending rose 0.8 percent that month, well above the 0.2-percent gain expected.
Cyclical stocks, including tech, financials and industrials were some of the biggest decliners.
The Dow's bottom three were JPMorgan, DuPont and American Express.
- Poll: What Do You Expect From the Jobs Report?
And the tech-heavy Nasdaq was the worst performer of the three indexes.
Shares of General Electric fell 2.7 percent following news that the conglomerate is in talks to sell its NBC Universal unit, the parent of CNBC, to Comcast. The deal would give Comcast a 51-percent stakein NBC Universal. Comcast shares dropped 7.2 percent.
Bank of America fell 4.2 percent following news that CEO Ken Lewis will step down at the end of the year following a tenure marked by controversy over the company's acquisitions of Merrill Lynch and Countrywide Financial.
Cisco Systems fell 1.9 percent after the networking-gear maker announced plans to buy a Norwegian videoconferencing-equipment maker for $3 billion in cash.
Microsoft fell 3.3 percent after Goldman Sachs removed the stock from its "conviction buy" list, saying the company may experience another soft quarter.
Chips took a hit with Nat Semi losing 6.2 percent and Micron Technology off 8.4 percent.
Penske shares tumbled 16 percent after the company said late Wednesday that it has ended talks with General Motors to buy the Saturn brand.
Ford shares dropped 3.3 percent after the automaker said its sales fell 8.9 percentin September.
General Motors, Toyota and other automakers also reported sales declines as the "Cash for Clunkers" glow wore off.
Volume for the first day of the quarter was above average, with 1.6 billion shares changing hands on the New York Stock Exchange. Decliners outpaced advancers, roughly 5 to 1.
This came after stocks logged their best quarter in 11 years: The Dow and S&P gained 15 percent in the third quarter, while the Nasdaq advanced 15.7 percent.
With the turning of the calendar page, investors are now focused on the upcoming earnings season and, more immediately, Friday's September employment report.
Still to Come:
FRIDAY: Sept jobs report; factory orders; Calif. IOUs mature
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