Stocks Drop Again Despite Positive Data

Strong economic reports Thursday couldn’t overcome a tumbling dollar and more fears about Mideast violence, with the result that Wall Street suffered another broad decline.

The Dow Jones industrial average fell 129.8 points, or 1.4%, to 9,431.77, its lowest since Nov. 2, while the Nasdaq composite index dropped 32.08 points, or 2.1%, to 1,464.75, its lowest since Sept. 27.

“There’s no confidence among investors, and it shows, because you get one up day and then you give it back again over the next couple,” said Robert Froehlich, chief investment strategist for Deutsche Asset Management. “Two years ago, everywhere you looked there was a reason to invest. Today, everywhere you look there is a reason not to invest.”

The market’s continuing slide is taking key indexes ever closer to the three-year lows they reached Sept. 21, in the aftermath of the terrorist attacks.

The Nasdaq composite stands 3% above its Sept. 21 low of 1,423, and the Standard & Poor’s 500, at 1,006.29 on Thursday, is 4.1% above its Sept. 21 low of about 966. The Dow is 15% above its Sept. 21 low of 8,235.

If the indexes drop to new lows it would suggest the 2-year-old bear market is beginning a new phase.

A bigger-than-expected increase in the index of leading economic indicators, reported Thursday, was expected to buoy investors’ confidence in the economy. But after trading modestly lower for much of the session, stocks slumped in the final hour.

Losers topped winners by 18 to 14 on the New York Stock Exchange and by 19 to 15 on Nasdaq. Trading was active.

Analysts cited Mideast worries and the dollar’s latest dive, triggered by news that the U.S. trade deficit ballooned in April.

The euro’s value surged to a two-year high of 96.5 cents from 95.7 cents Wednesday. The dollar also fell to 123.37 yen from 123.82.

The dollar’s slide raises concerns that more foreign investors will bail out of U.S. assets because each drop in the currency devalues their U.S. holdings.

Concerns about Brazil also may have weighed on Wall Street. The main Brazilian stock index plunged 5.1% to 10,908, and the government’s debt slumped in value after Moody’s Investors Service lowered Brazil’s foreign-currency debt rating outlook to “negative” from “stable,” citing an erosion of investor confidence. A new poll showed the leftist presidential candidate maintained his large lead with voters.

Investors also dumped U.S. Treasury bonds, halting a strong rally of the last few weeks. The yield on the 10-year T-note jumped to 4.79% from 4.73%.

Gold returned to favor, with near-term futures rising $3.40 to $323.20 an ounce in New York.

Among Thursday’s highlights:

* Auto stocks slid after brokerage Morgan Stanley warned that weakening sales may crimp earnings growth. GM fell $2.59 to $53.75, Ford lost 75 cents to $15.73, and DaimlerChrysler was off $1.17 to $43.98.

Among auto parts firms, Superior Industries lost $1.67 to $43.63, and Borg Warner fell $1.84 to $58.31.

* Genzyme led biotech shares lower, falling $6.17 to $19.70 after the firm cut its full-year earnings estimate because of slower sales of a kidney disease drug.

* Semiconductor stocks continued to lose ground, dragging the tech sector lower. Intel fell 85 cents to $19.24, and Micron Technology dropped $1.68 to $18.40.

* On the plus side, Mattel rose 7 cents to a 52-week high of $21.84 after Zacks Investment Research recommended the toy maker.

Also, home builders’ shares rallied anew in the wake of strong housing-sector data this week. Centex rose $1.44 to $58, and Lennar gained $2.37 to $61.55.

Market Roundup, C5-6