Stocks Close Sharply Lower as ECI Data Rekindle Rate Fears

The 30-year Treasury bond also suffered big losses due to the economic data.
Author:
Publish date:

Stocks swooned as a stronger-than-expected report on labor costs ignited fresh fears that the

Fed

will raise interest rates.

Meanwhile, in Atlanta, a gunman opened fire in a daytrading shop,

CNBC

was reporting.

Major market averages did manage to close off their session lows, however. The 30-year Treasury bond also suffered big losses due to the economic data.

Internet stocks were among the sectors that suffered heavily.

Inktomi

(INKT)

and

Yahoo!

(YHOO)

were the biggest losers among the components of

TheStreet.com Internet Sector

index. Inktomi was down 6 11/16 to 104 3/16, while Yahoo! was off 6 to 137.

Meanwhile, the

Nasdaq 100

tumbled 3%, while the

Philadelphia Stock Exchange Semiconductor Index

surrendered 3.4%.

All was not red in the market, however. On the upside, the

Philadelphia Stock Exchange Oil Service Index

climbed 3.4%, while the

Philadelphia Stock Exchange Gold and Silver Index

surged 4.6%.

A higher-than-expected rise in the

Employment Cost Index

for the second quarter took much of the blame for the selloff in stocks and bonds. The

Labor Department

said the ECI rose 1.1% in the second quarter, higher than expectations of an increase of 0.8%. Elsewhere on the economic front, the

Commerce Department

said second-quarter

gross domestic product

increased at a 2.3% annual rate, lower than expectations of a 3.3% rate.

On the

New York Stock Exchange

, decliners trounced advancers 2,227 to 805 on 766 million shares. On the

Nasdaq Stock Market

, losers thumped winners 2,589 to 1,349 on 907.1 million shares.

On the NYSE, 150 issues set new 52-week lows while 30 touched new highs. On the Nasdaq, 97 issues set new 52-week lows while new highs totaled 62.

On the Big Board,

Waste Management

(WMI)

was most active, with 38 million shares changing hands. It was down 5 7/16, or 17.3%, to 26, after it warned this morning that its second-quarter operating results will be less than it recently forecast.

On the Nasdaq,

Intel

(INTC) - Get Report

was most active, with 36.1 million shares changing hands. It was down 13/16 to 69 1/2.

Market data above are preliminary. Updated numbers and analysis will follow in the Market Roundup

Earlier...

3:01 p.m.: Stocks Continue to Post Sharp Losses After ECI Data

Major market averages hobbled into the final hour of trading sharply lower but off their worst levels of the day.

1:51 p.m.: Stocks Plummet Further Amid Renewed Rate Fears Stirred by ECI Data

Major stock proxies were trading around their session lows this afternoon as a higher-than-anticipated increase in labor costs in the second quarter was taking the blame for sparking the market's tumble.

1:02 p.m.: Midday Musings: Amid Heavy Selling, Market Mavens Call True Collapse Unlikely

11:59 a.m.: ECI Data Continue to Suppress Stocks

Stocks and bonds were down sharply in the wake of a stronger-than-expected report on labor costs, intensifying fears that the

Fed

will raise short-term interest rates when it meets on Aug. 24.

11:10 a.m.: Stocks Fall Further on ECI Data

A stronger-than-expected reading on labor costs in the second quarter has heightened fears of an interest-rate hike by the

Fed

, potentially as soon as August, helping send stocks and bonds deep into the red.

9:55 a.m.: ECI Data Knock Stocks Lower

The much-anticipated second-quarter

Employment Cost Index

came in stronger than expected and drove stocks and bonds down early on.