Weak reports see US stocks tumble

Weak reports on hiring and service industries sent the stock market sharply lower yesterday, giving the Dow Jones industrial average its worst day in more than a month.

The Dow fell 111.66 points, or 0.8%, to 14,550.35, its worst decline since February 25.

The Standard & Poor’s 500 index dropped 16.56 points, or 1.1%, to 1,553.69. Both indexes closed at record highs the day before.

The stock market started 2013 with a rally as investors became more optimistic about the US economy, especially housing and jobs.

But the reports yesterday disappointed the market and came two days after news that US manufacturing growth slowed unexpectedly last month.

The losses were widespread. All 10 industry groups in the S&P 500 index fell. Banks and energy stocks had the worst losses, 1.7% and 1.6%. Utilities, which investors hold when they want to play it safe, fell the least, 0.3%.

“The market is overdue for a correction,” said Joe Saluzzi at Themis Trading. “I don’t think that the economy supports this type of a rally.”

The yield on the 10-year Treasury note fell to 1.81% from 1.86%, the lowest level for the benchmark rate since January. The decline means investors are moving money into low-risk US government debt.

Small company stocks, which did better than the Dow and the S&P 500 in the first three months of the year, are more sensitive to the outlook for the US economy than the larger companies in the Dow and S&P.

That is because they rely far more on domestic sales than global giants like IBM and Caterpillar, which sells heavy machinery and construction equipment around the globe.