Raw materials companies helped depress the major indexes after prices for commodities like copper and oil plunged.
Traders focused on remarks by Chancellor Angela Merkel of Germany suggesting that the second bailout package for Greece might have to be renegotiated. Several European leaders want banks to take bigger losses on Greek bonds, but France and the European Central Bank oppose the idea.
Germany’s Parliament is set to vote Thursday on a measure that would give a European rescue fund more powers to fight the region’s debt crisis. Finland’s Parliament approved the proposal Wednesday, lifting some uncertainty over the crisis, which has dogged financial markets since late July.
“This is a market that has been fluctuating and is thoroughly susceptible to any news, any rumors, any innuendos” about Europe, said Quincy Krosby, a market strategist at Prudential Financial.
The Dow Jones industrial average fell 179.79 points, or 1.6 percent, to close at 11,010.90. It had gained 413 points over the last two days. The Standard Poor’s 500-stock index fell 24.32, or 2.1 percent, to 1,151.06. The Nasdaq composite index fell 55.25, or 2.2 percent, to 2,491.58.
Declines were broad. Only 17 of the 500 stocks in the S. P. 500 rose.
Raw materials stocks were down 4.5 percent. Investors fear that Europe’s problems could cause another global recession, weakening demand for basic materials like copper. The price of copper plunged 5.6 percent; crude oil fell 3.8 percent, to $81.21 a barrel..
The mining company Freeport-McMoRan Copper and Gold declined 7.2 percent, and Cliffs Natural Resources fell 8.4 percent. The coal producer Alpha Natural Resources was down 11 percent, the most of any company in the S. P.
Orders for durable goods slipped 0.1 percent last month. The modest decline was largely a result of an 8.5 percent drop in orders for automobiles and automobile parts.
Economists looked past the total figure and focused on a 1.1 percent increase in a crucial category that measures business investment plans. That is core capital goods that are not used for defense or transportation.
Shipments of those goods rose 2.8 percent, the fourth consecutive gain in the category. The government looks closely at shipment figures when calculating economic growth.
Economists said the fact that businesses kept expanding and modernizing during the turbulent month suggested many were confident about the future.
“Business capital spending is rising,” said Christopher Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York. “There is no recession.”
The Dow jumped 126 points minutes after the opening bell on that report. But those gains were gone within an hour, and the selling intensified in the last half-hour of trading.
The decline followed three days of gains. Stocks rose earlier this week on hopes that Europe was moving closer to resolving its debt problems. The Dow soared 272 points on Monday, its fourth-largest increase this year, and 147 points more on Tuesday.
“The market got ahead of itself,” said Joseph Saluzzi, co-head of stock trading at Themis Trading. Investors “assumed some kind of deal would be structured, and that was so far away from happening.”
Technology companies fared better than the overall market. The online retailer Amazon.com shot up 2.5 percent after it unveiled the Kindle Fire, a tablet device that will cost $199 and will compete with Apple’s hugely successful iPad.
Jabil Circuit, an electronics parts maker, rose 8.4 percent. The company reported strong earnings and a fourth-quarter earnings forecast that was better than analysts had expected.
The benchmark 10-year Treasury note fell 2/32 to 101 8/32, pushing its yield to 1.99 percent, down from 1.98 percent on Tuesday.
Article source: http://www.nytimes.com/2011/09/29/business/daily-stock-market-activity.html?partner=rss&emc=rss
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