Dow tumbles 123 points
US stocks fell sharply again today, with the Dow ones industrial average losing more than 123 points after a surprisingly weak reading on the service sector raised concerns about the continuing impact of higher energy prices.
Equities opened lower after yesterday’s selloff, then fell further when the Institute for Supply Management reported that its non-manufacturing business index, which measures the service sector, dropped to 53.3 in September from 65.0 in August.
While any reading above 50 indicates the US economy is expanding, the sharp drop in the index was unexpected, following a strong report in manufacturing earlier this month.
Today’s reading, which indicated supply managers were worried about higher energy costs, unnerved investors already worried about the effects that rising oil and gas prices will have going forward.
The market was still considering yesterday’s comments from Dallas Federal Reserve Bank President Robert Fisher, who said inflation was nearing the high end of the Fed’s comfort zone – a clear signal that the Fed’s short-term interest rate hikes would continue. The higher prices for energy have been filtering into the rest of the economy.
Investors are also jittery about earnings season, which officially starts on Monday. Some companies such as Clorox have already begun to warn their earnings will not meet expectations.
“We need to get (earnings season) out of the way and see how companies are doing,” said Barry Berman, head trader for Robert W Baird & Co in Milwaukee.
The Dow Jones industrial average fell 123.75, or 1.19%, to 10,317.36. The decline follows a drop of 94.37, or 0.9%, yesterday.
Broader stock indicators were lower. The Standard & Poor’s 500 index fell 18.08, or 1.49%, to 1,196.39, and the Nasdaq composite index fell 36.34, or 1.7%, to 2,103.02.
