After its dizzying climb, Wall Street is looking at the economy more skeptically. Stocks retreated more than 2 percent and bond prices rose after two reports showed that the economy is not bouncing back as quickly as investors hoped.
NEW YORK (AP) — After its dizzying climb, Wall Street is looking at the economy more skeptically.
Stocks retreated more than 2 percent and bond prices rose after two reports showed that the economy is not bouncing back as quickly as investors hoped. The Commerce Department said retail sales fell 0.4 percent in April, while RealtyTrac Inc. reported a troubling rise in home foreclosures.
Investors are mindful that the Dow Jones industrial average spiked 31 percent from its March 9 lows – the biggest jump in such a short span since the 1930s. Even after Wednesday’s decline the index is still up 26.5 percent, but investors are now wondering if the market will see a sharper pullback.
Analysts say a drop of 10 percent from the market’s recent peak would be hardly surprising, especially since recent economic readings have failed to beat expectations.
“Overall, it’s just a market that’s due for a pause, due for a pullback, due for consolidation,” said Quincy Krosby, chief investment strategist for The Hartford. “You don’t want markets to skyrocket. The higher you go, the deeper you fall.”
Few analysts, however, expect the stock market to sink lower than it did in March.
“What we’ve done over the past month-and-a-half is remove this idea of Armageddon,” said Charlie Smith, chief investment officer at Fort Pitt Capital.
According to preliminary calculations, the Dow Jones industrial average fell 184.22, or 2.2 percent, to 8,284.89.
Broader stock indicators sank even more sharply. The Standard & Poor’s 500 index fell 24.43, or 2.7 percent, to 883.92, while the Nasdaq composite index declined 51.73, or 3 percent, to 1,664.19.
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