Stock slide on economic worries

NEW YORK (CNNMoney.com) -- Stocks declined Thursday after a survey showed an unexpected drop in business activity in the Mid-Atlantic region.

The Dow Jones industrial average (down 55.36 to 12,408.51, Charts) and the broader S&P 500 index (down 5.97 to 1,417.56, Charts) both fell about 0.3 percent with about 2-1/2 hours left in the session. The tech-heavy Nasdaq composite (down 13.22 to 2,414.39, Charts) lost 0.4 percent.

Stocks turned lower around midday after the Philadelphia Federal Reserve Bank's survey showed regional business activity slumped in December.

The index on regional factory activity - which fell to a negative 4.3 versus forecasts for a positive 4.0 reading - brought investors' attention back to the health of the economy.

The Philly Fed survey signals a slowdown, said Scott Wren, senior equity strategist at A.G. Edwards & Sons. "It wouldn't surprise me if some of the regional surveys ahead show very modest growth," he added.

Stocks were flat before the report, and even a steep decline in oil prices wasn't enough to bring investors into the market ahead of the holiday break.

Also on the economic front, the Commerce Department said gross domestic product, the broadest measure of the nation's economic activity, grew at a slower pace in the third quarter than previously estimated. (Full story)

The Labor Department said initial jobless claims rose to 315,000 last week, exactly as predicted.

And the Conference Board said its index of leading economic indicators inched up 0.1 percent to 138.2 in November, also meeting expectations on Wall Street.

Of the 30 shares in the Dow, 21 fell and 9 rose.

Elsewhere, Best Buy (up $0.94 to $49.30, Charts) shares climbed 2 percent after Credit Suisse raised its rating on the electronics retailer to "outperform" from "neutral."

Jabil Circuit (down $2.50 to $24.06, Charts), an electronics contract manufacturer, sank 10 percent. The company late Wednesday issued a disappointing sales outlook for the current period.

Bed Bath & Beyond (down $1.52 to $38.41, Charts) also disappointed investors with its quarterly earnings report released after the market close Wednesday. The home goods retailer reported a higher quarterly profit, but the results fell short of forecasts. Shares tumbled 4 percent.

Ohio-based regional bank Huntington Bancshares (Charts) announced late Wednesday it had agreed to buy another Ohio-based regional bank, Sky Financial Group (up $3.41 to $27.70, Charts), for $3.6 billion. Sky shares surged 14 percent.

The Amex Oil index (down $12.19 to $1,186.77, Charts) slid 1 percent and the Amex Gold Bugs index (down $6.86 to $327.94, Charts) dipped 2 percent amid a decline in commodities prices.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by a margin of 5 to 3 on volume of 795 million shares. On the Nasdaq, decliners topped advancers by a margin of nearly 3 to 2 as 1.1 billion shares changed hands.

U.S. light crude oil for February delivery sank $1.12 to $62.60 a barrel on the New York Mercantile Exchange.

Treasury prices rose, lowering the yield on the benchmark 10-year note to 4.55 percent from 4.59 percent late Wednesday. Bond prices and yields move in opposite directions.

The dollar edged higher against the euro and the yen.

COMEX gold lost $3.30 to $621 an ounce.

In global trade, Asian stocks closed mostly lower, although Japan's Nikkei posted a gain. Stocks in Europe finished mixed.

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