NEW YORK - Wall Street skidded lower yesterday after a weaker-than-expected reading on the manufacturing sector.
The major indexes each lost more than 1 percent. The Dow industrials fell 220.86, closing at 13,043.96 after briefly falling below 13,000 for the first time since November.
The Standard & Poor's 500 index slid 21.20 to 1,447.16, and the Nasdaq composite index fell 42.65 to 2,609.63.
The Institute for Supply Management's report that its manufacturing index fell to 47.7 percent for December from 50.8 percent in November raised concerns that the economy could be slowing at a quicker pace than some investors had estimated. The reading below 50 signals economic contraction, whereas readings over 50 indicate expansion.
The figures are closely watched because a slowdown in factory production can translate to job cuts, which in turn reduce consumer spending, a major component of the economy.
Analysts polled by Thomson/IFR had anticipated that manufacturing would expand modestly in December.
The chairman of the institute's survey committee, Norbert Ore, said supply executives reported that slower demand was more of a problem than excess inventory. The survey found weakness in new orders and production, which reversed in December after showing growth in November.
Many economists believe the U.S. economy grew at an anemic rate of about 1.5 percent in the final quarter of the year and that it could slow to 0.5 percent or less in this first three months this year.
A growing number of economists expect a recession because of turmoil in the housing market and continuing tight credit conditions.
Meanwhile, the Commerce Department reported yesterday that construction spending edged up slightly in November as the continued housing slump was offset by record spending on government and business projects.
Spending was up 0.1 percent in November to a seasonally adjusted annual rate of $1.165 trillion. Spending had fallen by 0.4 percent in October.
Housing fell in November for a record 21st straight month, with private residential construction dropping by 2.5 percent to an annual rate of $484.9 billion, down by 17.5 percent from a year ago.
Private nonresidential spending rose by 1.7 percent, a 14th consecutive monthly gain, which pushed spending in this category to a record annual rate of $375.8 billion.
Strong increases were posted for office building, hotels, power plants, factories, and amusement parks.
Spending on government projects rose by 2.5 percent, the biggest one-month gain since December, 2006, pushing activity in this area to a record annual rate of $304.3 billion.
Stocks failed to gain momentum after an initial bounce after minutes from the Federal Reserve's last meeting.
Central bankers, who voted to cut interest rates a quarter percentage point, called the economic outlook "unusually uncertain." Although that strengthened the case for lower rates, it also confirmed some of the market's worst fears about the economy.
Guidelines: Please keep your comments smart and civil. Don't attack other readers personally, and keep your language decent. Comments that violate these standards, or our privacy statement or visitor's agreement, are subject to being removed and commenters are subject to being banned. To post comments, you must be a registered user on toledoblade.com. To find out more, please visit the FAQ.