By Kristina Peterson
U.S. stocks deepened their decline after the Philadelphia Fed
August business index unexpectedly dropped and an index of leading
indicators rose less than predicted, adding to mounting concerns
over the stagnant labor market.
The Dow Jones Industrial Average (DJI) fell 145 points, or 1.4%
to 10271, and recently traded off 114 points. The Nasdaq Composite
(RIXF) fell 1.3% to 2187. The Standard & Poor's 500-share index
(SPX) fell 1.5% to 1078.
Economic data released Thursday darkened the outlook for the
economic recovery. The Philadelphia Fed index came in at negative
7.7, rather than the positive 7.0 reading some economists were
expecting.
Separately, an index of leading indicators rose 0.1% in July,
less than the 0.2% gain expected. The index's June decline was also
revised down 0.3%, which had first been reported as a 0.2% drop,
the Conference Board said Thursday. In July, five of the ten
leading indicators increased, led by improvements in the interest
rate spread and the factory workweek.
The morning's labor market snapshot discouraged investors who
had been hoping to see claims fall below 450,000 instead of hitting
their highest level since Nov. 14. Initial unemployment claims
unexpectedly rose by 12,000 to 500,000 in the week ended Aug. 14,
the Labor Department said Thursday.
Also rattling the market, the Congressional Budget Office
released a new projection of the deficit, reflecting a worsening of
the deficit picture for fiscal 2011, but little change in other
years since its last estimate in January.
On the Dow, Intel Corp. (INTC) shares led decliners with a drop
of 3.5% after the chip giant agreed to pay $7.68 billion to acquire
computer-security software maker McAfee Inc. (MFE), whose shares
soared 58%. The acquisition was the latest high-profile
announcement in a week marked by a resurgence in deal activity.