By: Cindy Perman
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.
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 percent in 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.
Shares of General Electric [GE 15.55 -0.42 (-2.63%) ] fell 2.7 percent following news that the conglomerate is in talks to sell its NBC Universal unit, the parent of CNBC, to Comcast [CMCSA 15.55 -0.12 (-0.77%) ]. The deal would give Comcast a 51-percent stake in NBC Universal. Comcast shares dropped 7.2 percent.
Bank of America [BAC 16.3803 0.1703 (+1.05%) ] 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.
Full report at CNBC