Stocks fall sharply on consumer spending worries
New evidence of a softening global economy sends the Dow tumbling. Manufacturing activity hits a 26-year low, and construction spending drops more than expected.
Reporting from New York — Last week's Thanksgiving rally went the way of discarded turkey bones today as stocks were pounded by fresh evidence of a softening global economy.
The Dow Jones industrial average slumped more than 400 points after U.S. manufacturing activity fell to its lowest level in 26 years, and similar declines struck in Europe and Asia. Construction spending also tumbled more than expected.
Many experts were looking for stocks to give back some of the gains from a five-session rally that had carried the Standard & Poor's 500 index up more than 19% since Nov. 21. But today's drop was more than many had anticipated.
As of 8:30 a.m. PST, the Dow was down 402.78 points, or 4.6%, to 8,426.26, while the S&P skidded 48.07 points, or 5.4%, to 848.17. The Nasdaq composite index fell 80.72 points, or 5.3%, to 1,454.85.
All 10 S&P industry groups were lower, led by an 8.2% plunge in financials and 6% drops in energy and industrials.
Despite Black Friday sales that topped some estimates, retailing stocks were hit by worries that consumers were scooping up only bargain-priced items and that shopping levels would recede as the holiday season progressed.
Limited Brands Inc. was off 13.2%, Macy's Inc. fell 10.7% while Gamestop Corp. tumbled 9.2%.
