NEW YORK — Wall Street dove sharply lower today, sending the Dow Jones industrials down over 300 points on more disappointing economic news: Sluggish back-to-school sales and a jump in unemployment claims.
The stock market has been highly volatile lately, reflecting investors’ anxiety about the overall state of the economy. They were further unsettled today when many of the nation’s retailers said shoppers curtailed spending last month due to higher gas and food prices. Wal-Mart Stores Inc., the world’s largest retailer, beat expectations, but many teen retailers and luxury chains did poorly.
Meanwhile, the Labor Department said new applications for unemployment insurance rose by 15,000 from the previous week. That broadly missed expectations for a fourth-straight week of declines.
“The initial jobless claims number was higher than expected,” said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams. “Everybody is worried about the unemployment number out (Friday). It’s just a perfect storm.”
The market was so disheartened by those reports that it showed little reaction when the Institute for Supply Management said the service sector grew unexpectedly in July for the first time in three months as new orders increased and inflation moderated. The August reading of 50.6 was higher than the 50.0 expected, and the reading of 49.2 in July; but the sector’s edging above the threshold between contraction and expansion was hardly a sign of a robust economy.
And investors are not expecting any promising news in the Labor Department’s August jobs report on Friday. Economists are predicting the eighth straight monthly payrolls drop, and a rise in the unemployment rate.
With economic data still coming in spotty, Wall Street’s hopes for a late-year economic rebound are all but dashed — and with the Dow down more than 15 percent for the year so far, investors don’t appear to be holding out for a significant upturn in stocks, either.
In midafternoon trading, the Dow Jones industrial average fell 333.17, or 2.89 percent, to 11,199.71.
Broader indexes also tumbled. The Standard &Poor’s 500 index fell 36.39, or 2.85 percent, to 1,238.59, and the Nasdaq composite index dropped 66.96, or 2.87 percent, to 2,266.77.
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