US stocks down

Wall Street’s growing pessimism about the US economy sent stocks down for a second day in a row today, as investors lost the enthusiasm that followed Wednesday’s Federal Reserve’s decision to leave interest rates unchanged.

The market was caught off guard yesterday by a report from the Federal Reserve Bank of Philadelphia that showed regional manufacturing activity fell to a negative reading for the first time since April 2003.

Prior to the manufacturing data, the Dow Jones industrial average had been within 100 points of its January 2000 high of 11,722.98 following the Fed’s widely expected decision on short-term interest rates.

“I think the markets are all of a sudden worried about slower growth,” said Dean Junkans, chief investment officer for Wells Fargo Private Client Services. “I wouldn’t put as much emphasis on one number as the market seems to have done in the last couple days,” he said, referring to the Philadelphia Fed figure.

Junkans contends the markets have overreacted to the Philadelphia data and were perhaps looking for a reason to pause after posting strong gains in September.

“If you’re looking to take some profits that number probably gave you a reason to do that,” he said.

The Dow closed down 25.13, or 0.22%, at 11,508.10, having dropped nearly 80 points yesterday.

Broader stock indicators also fell. The Standard & Poor’s 500 index was down 3.25, or 0.25%, at 1,314.78 and the Nasdaq composite index fell 18.82, or 0.84%, to 2,218.93.

Bonds jumped sharply, with the yield on the benchmark 10-year Treasury note falling to 4.60% from 4.64% yesterday. The dollar was mixed against other major currencies, while gold prices rose.