Stocks Drop After Economic Data
Stocks pared most of their early losses Wednesday as investors juggled uncertainty about the health of the economy with a renewed sense that Wall Street has skirted the worst of a widespread credit squeeze.
A reading on the nation's service economy, whose industries range from banking to retail and travel and account for 80 percent of U.S. economic activity, came in as expected and gave investors little reason to rally on hopes of an interest rate cut. But it also appeared to quiet some concerns about a sharp economic slowdown.
The Institute for Supply Management report showed the service sector expanded at a slower pace in September than in August. The trade group's non-manufacturing index fell to 54.8 from 55.8 in August as expected; the index is now at its lowest point since March. A reading above 50 indicates economic expansion, while a figure below 50 signals contraction.
Comments from former Federal Reserve Chairman Alan Greenspan that the "worst is over" in the credit turmoil that swept global markets in recent months appeared to give a lift to investor sentiment. His comments followed a similar assesment from Citigroup Inc. on Monday.
Wall Street appears to be taking many economic readings in stride, perhaps expecting some slowdown before the Fed's rate cut is reflected in economic data. Often, such cuts can take more than a year to fully work themselves into the economy.
Source: Tim Paradis, AP Business Writer
Labels: Alan Greenspan, C, DB, Federal Reserve, UBS
posted by Stock Administrator @ 12:29 PM
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