Stocks belly-flopped Thursday, after investors interpreted a weaker-than-expected manufacturing report as reason to worry even more about the economy’s health.
After declining steadily throughout the day, the Dow Jones industrial average closed down 115.03 points, or 1.1 percent, at 10,229.95.
The painful downturn continues a strongly negative trend that has dominated trading since the start of October. With only a few days remaining until the month’s end, the blue chips have surrendered nearly 339 points, or 3.2 percent.
The broader Standard & Poor’s 500 index dropped 12.48, or 1.05 percent, to close at 1178.90. So far this month, the S&P is down 4.1 percent.
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“The S&P appears to be heading for its worst monthly performance since December 2002,” said A.G. Edwards market strategist Al Goldman.
Investors have grown increasingly focused on the threat of inflation, rising interest rates and the staying power of currently robust corporate earnings. In recent days, rising bond yields also have been putting pressure on equity prices.
On Thursday, observers attributed a good portion of the big decline to a disappointing report from the Commerce Department. The report showed that in September, orders received by U.S. factories for big-ticket manufactured items, known as durable goods, landed well below forecasts.
And while an economist for the National Association of Manufacturers warned against “reading too much gloom” into the data, Wall Street soured almost as soon as the numbers were released.
There were other issues as well. The Dow was pulled down by General Motors’ widening travails. GM shares dropped 6.8 percent, to $27.19, on news that the Securities and Exchange Commission has stepped up a probe of GM’s accounting on pension practices and related issues.
Shares of another Dow company, Exxon Mobil, slid 1.1 percent, to $55.60, even though the energy giant reported staggeringly rich third-quarter earnings of $9.92 billion.
The technology-heavy Nasdaq composite index fell 36.24, a painful 1.73 percent decline, to close at 2063.81.
Treasury securities firmed modestly, with the 10-year bond rising 5/32 to yield 4.56 percent.
Well, that’s one opinion: U.S. Bancorp Asset Management officials offered an upbeat view of the coming year in a market outlook conference call Wednesday.
“Our outlook for 2006 is reasonably bullish,” said Mark Jordahl, chief investment officer.
Over the past year, he said, corporate earnings have risen, while stock prices have essentially gone nowhere. That has lowered price-to-earnings multiples, and as a result “substantial risk has been wrung out of the market,” he said.
Among stocks, “We’re still at a point where there aren’t many bargains out there,” Jordahl said, but investor concerns should ease, and “a smart investor can make money in this market.”
Local stocks: FreightCar America shares climbed 7.3 percent, to $40.40, after the Chicago maker of specialized railcars for hauling coal reported better-than-expected quarterly results. FreightCar, which has seen its stock more than double since its $19-a-share initial public offering not quite seven months ago, continues to benefit from coal’s resurgence as a U.S. energy source.
– Kanbay International, the Rosemont-based information-technology services provider, sent its shares plunging nearly 25 percent, to a 52-week low of $15.02, by reporting disappointing third-quarter profit and issuing a downbeat forecast for the year’s final period.
– Shares of Brunswick Corp., the Lake Forest concern best known as the nation’s leading maker of recreational boats and marine engines, dropped 5.5 percent, to a two-year low of $35.09. Brunswick’s earnings are due out Friday, but the decline probably can be traced to some downbeat numbers reported this week by other marine-industry players, including dismal earnings reported Thursday by California boating-supplies retailer West Marine.
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