Weak Philly Fed Batters Stocks
Updated from 4:16 p.m. EST
Stocks in the U.S. rallied out of the gate Thursday, but the major averages spent the bulk of the session in the red and closed lower following a much weaker-than-expected report on manufacturing activity in the mid-Atlantic region.
The Dow Jones Industrial Average lost 142.96 points, or 1.2%, at 12,284.30, and the S&P 500 was down 17.50 points, or 1.3%, at 1342.53. The tech-heavy Nasdaq Composite fell 27.32 points, or 1.2%, to 2299.78.
After a positive start, New York shares dropped significantly when the Federal Reserve Bank of Philadelphia said its monthly index sank to negative 24 from minus 20.9 in January. A number below 0 indicates a contraction in activity, and that was worse than economists' already poor average expectation of a negative 10 reading.Evidence has been building for months that the economy is in danger of entering a recession, in no small part due to the carnage in the credit markets, which has led the Fed to sharply lower borrowing costs. However, some data have remained upbeat, and policymakers have been reluctant to completely abandon the argument that too much easing could create inflationary pressures, especially in an environment of soaring commodity prices. "This data just reinforces the fact that the Fed is likely to cut interest rates again
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