Stocks slide on economic woes
Major gauges decline after regional manufacturing index posts surprise drop, GDP growth slower than expected; oil sinks $1.
NEW YORK (CNNMoney.com) -- Stocks declined Thursday after a report showing an unexpected drop in manufacturing in the Mid-Atlantic region triggered concerns about the slowing economy.
The Dow Jones industrial average (down 42.62 to 12,421.25, Charts) fell 0.3 percent, the broader S&P 500 index (down 5.23 to 1,418.30, Charts) lost 0.4 percent and the tech-heavy Nasdaq composite (down 11.76 to 2,415.85, Charts) slid 0.5 percent.
Stocks were flat early in the session but turned lower around midday after the Philadelphia Federal Reserve Bank's monthly survey posted a big decline in December.
Investors will look for more clues about the strength of the economy Friday. Reports on durable goods orders, personal income and spending, and consumer sentiment are all due.
Friday closes out the last full trading week of the year and volume is likely to be light as traders get a head start on the holiday weekend.
Economy in focus
The Philly Fed index - which fell to a negative 4.3 in December, versus forecasts for a positive 4.0 reading - brought investors' attention back to the health of the economy on Thursday.
The survey of regional factory activity 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.
Also on the economic front, Richmond Federal Reserve Bank President Jeffrey Lacker issued a warning about inflation, saying it remains the top risk to the economy.
Investors - from the looks of the bond market, at least - were more focused on the signs of economic cooling. Treasury prices jumped, lowering corresponding yields.
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.
Bed Bath & Beyond (down $1.39 to $38.54, 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 almost 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 $3.40 to $27.69, Charts), for $3.6 billion. Sky shares surged 14 percent.
Market breadth was negative. On the New York Stock Exchange, losers beat winners by a margin of 3 to 2 on volume of 1.35 billion shares. On the Nasdaq, decliners topped advancers by a margin of 4 to 3 as 1.76 billion shares changed hands.
U.S. light crude oil for February delivery sank $1.06 to settle at $62.66 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 held steady against the euro and the yen.
COMEX gold lost $2.70 to $621.60 an ounce.