Dow drops 100 Points in 2008 session

[Dark Silver]

Associated Press WebNews

NEW YORK (AP) -- Stocks fell Wednesday after a weaker-than-expected reading on the manufacturing sector triggered concerns of a further slowdown in the overall economy. The Dow Jones industrials fell more than 100 points.

The Institute for Supply Management's report that its manufacturing index fell to 47.7 percent for December from 50.8 percent in November raised concerns that the economy could be slowing at a quicker pace than some investors had estimated. The reading below 50 signals economic contraction, whereas readings over 50 indicate expansion.

Analysts polled by Thomson/IFR had anticipated that manufacturing would expand modestly in December.

The reading was unwelcome for investors wading into the first trading session of 2008 and indicated the concerns that weighed on stocks in the second half of 2007 will for now persist.

Wall Street remains uneasy over the economy, specifically the state of the housing market and tightness in the credit markets brought on by fears of faltering mortgage debt. In addition, the health of the consumer is again in focus as investor are awaiting the government's December employment report, due Friday.

But first, investors are hoping to obtain some insights into the mood at the Federal Reserve. The minutes from the central bank's Dec. 11 meeting, when policy makers lowered key interest rates by a quarter point, could upset investors if they signal the Fed is struggling to balance concerns about inflation and slowing growth.

The arrival of the new year will be accompanied by a return of more of Wall Street's regular players. The recent weeks surrounding the holidays have seen light trading volume, making it hard to draw any meaningful reading on the market's mood. Moves higher or lower tend to be exaggerated amid light sessions.

In midmorning trading, the Dow Jones industrial average fell 117.38, or 0.88 percent, to 13,147.44.

Broader stock indicators also fell. The Standard & Poor's 500 index slid 9.29, or 0.63 percent, to 1,459.07, and the Nasdaq composite index fell 13.15, or 0.50 percent, to 2,639.13.

Bond prices surged after the ISM report. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.94 percent from 4.03 percent late Monday. The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude rose $1.85 to $97.83 per barrel on the New York Mercantile Exchange following violence in the oil-producing nation of Nigeria and speculation that inventory figures will show drops in levels of U.S. supplies.

Overseas, Germany's DAX index fell 0.06 percent and France's CAC-40 lost 0.24 percent.