Poor showing for Dow

A warning from tech giant Intel about poor business conditions and more evidence of rising unemployment left US stocks with their biggest losses in a month today.

The news upended some investors’ hopes for a speedy economic recovery this year and left the major stock indexes down more than 2.5 %, including the Dow Jones industrials, which lost 245 points.

Intel’s second warning since November as well as bleak outlooks from aluminium producer Alcoa and media industry bellwether underscored the breadth of the economy’s slowdown as did the ADP National Employment Report, which said private sector jobs fell by a greater-than-expected 693,000 in December. That made investors nervous ahead of Friday’s employment report from the US government.

But unlike the panicked declines seen last fall, today’s pullback was more orderly and stocks finished off their lowest levels. Some retrenchment had been expected following sharp gains in recent sessions and a 24.2 % rally in the Standard & Poor’s 500 index since November 20.

Wall Street has been absorbing poor economic and corporate news far better since November as some investors have hoped for a recovery in the second half of this year or early 2010, but the latest round of unnerving news proved to be too much to set aside.

Joe Saluzzi, co-head of equity trading at Themis Trading LLC, said the market was simply reacting to the day’s drubbing of bad news. “One too many punches and the fighter finally went down,” he said.

Intel Corp. said it now expects fourth-quarter revenue to drop a greater-than-expected 23% on a further weakening in demand from computer makers.

Wall Street was already worried about what the Labour Department’s report on employment would bring. The report is typically the most important economic reading each month because rising unemployment could endanger consumer spending, which accounts for more than two-thirds of US economic activity.

Other corporate news added to Wall Street’s downbeat mood. Alcoa warned late yesterday it would slash its annual output by more than 18 % and cut its global work force by 13%.

Intel dropped 93 cents, or 6%, to 14.44. Alcoa tumbled 1.23, or 10%, to 10.89.

According to preliminary calculations, the Dow dropped 245.40, or 2.72 %, to 8,769.70. The Standard & Poor’s 500 index fell 28.05, or 3 %, to 906.65, while the Nasdaq composite index fell 53.32, or 3.23 %, to 1,599.06.

The Russell 2000 index of smaller companies fell 17.61, or 3.42%, to 497.10.

Declining issues outnumbered advancers by about 4 to 1 on the New York Stock Exchange, where volume came to a light 1.24 billion shares.