Stock prices fell yesterday, marking their first three-day slide since the beginning of October, as investors braced for a number of economic announcements later this week.
The Dow Jones industrial average fell 178.18, or 2.1 percent, to 8358.95. The broader-based Standard & Poor's 500-stock index shed 18.55, also 2.1 percent, to finish at 876.19. The technology-heavy Nasdaq Stock Market composite index dropped 40.09, or 2.9 percent, to 1319.19.
"The markets are going to be on pins and needles this week digesting all the news that comes in," said Arthur Hogan, Boston-based chief market analyst at Jefferies & Co., an investment-banking and securities firm. "Last week we got a bunch of good news, but that may not happen this time, and the markets will need to find a level."
Tomorrow, Federal Reserve Chairman Alan Greenspan will testify in Congress on the state of the economy. On Thursday, the Commerce Department will release retail sales figures for the previous month, and the Labor Department will provide its weekly jobless numbers. On Friday, the Fed will announce industrial production and capacity utilization figures for October, while the University of Michigan will release the results of its monthly consumer confidence survey.
"I think of all the data coming in, the things to focus on are the jobless and retail sales numbers," said Jay N. Mueller, an economist and portfolio manager at Strong Capital Management, a Milwaukee-based firm that manages around $40 billion.
"At this stage of the business cycle we'll be looking for more positive labor-market news, which is one of the last things to come back when the economy recovers. And the sales numbers are particularly important in the holiday period."
Market analysts are expecting that retail sales fell in October for the second consecutive month, the first time that has happened in two years. Jobless claims are projected to hover just below 400,000, as they did last week, while the industrial production forecast is for a slight decline.
Analysts say investors' reactions to this economic data could indicate whether the market will resume its climb. Last week, after the Republican Party made significant gains in the congressional elections and Federal Reserve officials lowered interest rates by half a percentage point, markets jumped ahead on Wednesday but then fell on Thursday and Friday to break a string of four consecutive weekly advances.
Leading yesterday's decline was Hewlett-Packard, whose stock fell by its steepest margin in more than a year after the resignation of President Michael D. Capellas. General Electric shares fell sharply on word that the sale of its reinsurance unit would be less profitable than was previously thought.
Analysts also attributed the heavy selling to the prospect of war in the Persian Gulf, after members of the Iraqi parliament spoke out against the recent United Nations resolution demanding weapons inspections and President Bush gave a tough-sounding Veterans Day speech on Iraq.
* The New York Stock Exchange composite index fell 8.71, to 467.95; the American Stock Exchange index fell 5.95, to 818.23; and the Russell 2000 index of smaller-company stocks fell 9.86, to 369.14.
* Declining issues outnumbered advancing ones by 5 to 2 on the NYSE, where trading volume fell to 1.13 billion shares, from 1.46 billion on Friday. On the Nasdaq, decliners outnumbered advancers by 8 to 3 and volume totaled 1.24 billion, down from 1.57 billion.
* Bond markets were closed in observance of Veterans Day.
* The dollar fell against the Japanese yen and rose against the euro. In late New York trading, a dollar bought 119.52 yen, down from 119.78 late Friday, and a euro bought $1.0105, down from $1.0132.
* Light, sweet crude oil for December delivery settled at $25.94 a barrel, up 16 cents, on the New York Mercantile Exchange.
* Gold for current delivery fell to $321.20 a troy ounce, from $321.30 on Friday, on the New York Mercantile Exchange's Commodity Exchange.