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Dow Drops 74 Points to Close Below 10,000 as Economic Fears Persist

Thursday, 26 Aug 2010 05:02 PM

Stocks ended lower Thursday after early gains from a better report on jobless claims faded. The Dow Jones industrial average closed below 10,000 for the first time since early July.

The Dow lost 74 points, having been up as much as 45 earlier. The back-and-forth trading pattern has been common in recent weeks as many investors remain unconvinced that the economic recovery will hold.

The early gains were driven by a report showing that first-time claims for jobless benefits fell last week after three straight weekly increases. The gains evaporated by mid-morning as concerns about unemployment and other woes plaguing the U.S. returned.

Hungry for more news on the economy, traders turned their attention to a speech by Ben Bernanke coming up early Friday. They're waiting to see if the Federal Reserve chairman may shed light on how weak the U.S. economy really is and whether the Fed may take more steps to revive it.

Investors want to "see if the pulse of the Fed is beating at a fast rate with anxiety over the economy," said Peter Cardillo, chief market economist at Avalon Partners Inc.

Bernanke has been extremely cautious about the economy in recent remarks, and has said the current recovery is "unusually uncertain."

Stephen Lieber, chief investment officer at Alpine Mutual Funds, said that Bernanke "can't exactly reverse his caution. But he can say there are actions he can take" to promote growth.

According to preliminary calculations, the Dow fell 74.25, or 0.7 percent, to 9,985.81. The Dow had traded below 10,000 several times this week, but hadn't closed below that level since July 6.

Broader market barometers also fell. The Standard & Poor's 500 fell 8.11, or 0.8 percent, to 1,047.22, while the Nasdaq fell 22.85, or 1.1 percent, to 2,118.69.

Falling stocks outpaced rising ones two-to-one on the New York Stock Exchange, where volume came to 1 billion shares.

The Labor Department said first-time claims for unemployment benefits dropped to 473,000 last week, a bigger drop than analysts expected. First-time claims had jumped ominously the week before, going above 500,000 for the first time since November.

Stocks have been on a generally declining trend in August after charging ahead in July. A bevy of poor indicators on the economy, especially home sales, pierced an optimistic mood brought on by strong earnings reports the month before. The Dow has lost ground in five of the past six trading sessions, and has shed 430 points over that time.

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Stocks ended lower Thursday after early gains from a better report on jobless claims faded. The Dow Jones industrial average closed below 10,000 for the first time since early July. The Dow lost 74 points, having been up as much as 45 earlier. The back-and-forth trading...
US,Wall,Street
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2010-02-26
Thursday, 26 Aug 2010 05:02 PM
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