NEW YORK – A string of reminders that the economy is still struggling as well as disappointing earnings at Exxon Mobil irked investors Thursday, and pushed stocks sharply lower. The Dow Jones industrials tumbled nearly 230 points, their first triple-digit loss in nearly two weeks.
Two discouraging economic reports — a drop in construction spending and a weak reading of national business activity — came a day after an unexpectedly steep decline in gross domestic product in the second quarter.
Wall Street suffered big losses, just as investors were beginning to feel that the market had suffered its worst days and that prices were low enough for them to start buying again.
“You give them a little bit of hope and now it looks like it is being jerked away again,” said Richard A. Dickson, a technical analyst at Hilliard Lyons in Louisville, Ky.
The Dow closed down 229.97, or 2.6 percent, at 8,506.62 — its first triple-digit decline since July 22, when it lost 234.
Since that previous loss, the Dow had two 400-plus surges — 488.95, its second-biggest daily point gain ever, on July 24, and 447.49 on Monday, its third-largest daily point gain. Those stunning advances were mostly responsible for a four-session gain of 1,009.
The broader market also pulled back on Thursday. The Nasdaq composite index dropped 48.26, or 3.6 percent, to 1,280.00. The Standard & Poor’s 500 index fell 26.96, or 3 percent, to 884.66.
Thursday’s decline reverted to more than 10 weeks of selling based on fears about the economy and a loss of confidence in corporate America. The Securities and Exchange Commission is investigating an array of energy and telecommunications companies and their executives because of deceptive accounting practices.
“If the economy is slowing down, and earnings don’t hold up, many feel their equity exposure right now is still too high even at lower (stock price) levels,” said Alan Ackerman, executive vice president at Fahnestock & Co. “How cheap is cheap, and how daring do investors want to be with so much uncertainty ahead?”
Investors were disheartened by two economic reports indicating that the economy is still weak. Analysts said the reports also increased concerns that the economy, which had appeared to be recovering, has instead slid into a deeper recession, called a double-dip.
“There are worries now that we are in a double-dip (recession) ... If that is the case, you have a market that is still pretty richly valued,” Dickson said.
The Commerce Department said that construction spending dipped 2.2 percent in June, missing analysts’ expectations for a 0.3 percent rise. And the Institute for Supply Management said its gauge of business activity stood at 50.5 in July, well short of the 55 reading analyst were anticipating.
Investors were also reminded Thursday of their concerns about corporate ethics, as two former WorldCom executives surrendered to face federal charges related to a multibillion accounting fraud at the bankrupt telecom. Former chief financial officer Scott Sullivan and former controller David Myers turned themselves in to the FBI Thursday morning.
Oil stocks were among the market’s biggest losers with Exxon Mobil, a Dow stock, falling $3.11 to $33.65 on second-quarter earnings that missed analysts’ expectations by 7 cents a share. Disappointing profits also pulled down Royal Dutch, which slid $3.49 to $42.21.
Financial issues suffered from a Merrill Lynch downgrade of Dow industrial American Express, which itself fell 90 cents to $34.36.
Technology also contributed to the market’s downside. Software maker Adobe Systems plunged nearly 30 percent, down $7.13 at $16.83, after lowering its third-quarter earnings and revenue estimates. Additionally, several brokerages, including UBS Warburg, Goldman Sachs and Merrill Lynch, downgraded Adobe shares.
Other tech losers included IBM, down $2.15 at $68.25, and software maker Oracle, off 34 cents at $9.67.
Declining issues outnumbered advancers about 3 to 2 on the New York Stock Exchange. Consolidated volume totaled 2.04 billion shares, below Wednesday’s 2.52 billion.
The Russell 2000 index, which tracks smaller company stocks, fell 3.21, or 0.8 percent, to 389.21.
Overseas, Japan’s Nikkei stock average finished Thursday down 0.9 percent. Stocks fell sharply in Europe where France’s CAC-40 sank 5.1 percent, Britain’s FTSE 100 dropped 4.8 percent and Germany’s DAX index lost 2.5 percent.