Markets Buckle, Hit By Weak Economic News

Posted by Unknown on Wednesday, October 1, 2014

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Business Day |A Sharp Drop for the Markets Amid Ebola Concerns

http://nyti.ms/1nMlXC6

United States stocks sank Wednesday, and the Dow Jones industrial average fell more than 200 points on disappointing economic news and a slide in airlines stocks over Ebola fears.

Investors moved money into the traditional havens in times of uncertainty: bonds, gold and stocks that pay large dividends, such as utilities.

KEEPING SCORE The Dow Jones industrial average fell 1.49 percent and the Standard & Poorâ€™s 500-stock index was down 1.29 percent. The Nasdaq composite index dropped 1.64 percent.

U.S. DATA IN FOCUS A closely watched index measuring manufacturing fell in September. The Institute for Supply Managementâ€™s survey came in at 56.6, below the 58.5 economists had been looking for. That more than offset positive news from the payroll processing company ADP, which showed private employers hired 213,000 workers last month. That was slightly better than the 207,000 workers economists expected, according to FactSet.

SAFETY Investors moved quickly into United States government bonds. The yield on the 10-year Treasury note dropped to 2.41 percent from 2.49 percent late Tuesday, a big move. Gold prices rose as well, up $5.90, or 0.5 percent, to $1,217.40 an ounce.

â€œA lot of people though this economic data was going to be robust, so when it was weak, everyone moved to reposition,â€ said Tom di Galoma, head of rates and credit trading at ED&F Man Capital.

DOWN TO EARTH News that the first case of Ebola was diagnosed in the United States reverberated through several industries. Airlines were among the hardest hit as investors feared people would be discouraged from traveling. American Airlines shares fell 3 percent; Delta, 4 percent.

Shares of drugmakers developing potential vaccines or treatments for Ebola rose. Tekmira Pharmaceuticals stock jumped 20 percent after the company said it may start clinical trials for an Ebola drug this year. Shares of NewLink Genetics, another company looking into Ebola treatments, rose 7 percent.

GERMANY WEIGHS ON EUROPE A purchasing managers survey by Markit showed that German manufacturing unexpectedly contracted in September, the latest sign that Europe is being affected by the sanctions on Russia. It was the first time German manufacturing contracted in 15 months. The DAX closed down 1 percent while the CAC-40 in France fell 1.2 percent. The FTSE 100 of leading British shares finished 1 percent lower.

E.C.B. LOOMING Traders were also looking ahead to Thursdayâ€™s European Central Bank policy meeting in Naples, Italy. Though no change in policy is anticipated, there will be great interest in what the central bank president, Mario Draghi, says about a possible monetary stimulus from the central bank following further weak inflation data.

HONG KONG IN SPOTLIGHT Across Asian financial markets in particular, there was great interest in the pro-democracy demonstrators taking place in Hong Kong. Streets in the business district have closed in the biggest threat to Beijingâ€™s authority since China took control of the former British colony in 1997. Some banks, schools and stores have closed, though analysts said they saw no significant damage to the economy of this Asian financial center.

ENERGY Benchmark United States oil added $1.64 cents to $92.80 a barrel in electronic trading in New York. The contract dropped $3.41 on Tuesday to $91.16, pushed down by plentiful supplies and a rise in the dollar â€” in which oil sales are priced â€” against other currencies.