Stocks slumped again Wednesday as worries about the U.S. economy deepen.
The Dow Jones industrial average was down 101 points in afternoon trading, putting in on track for its ninth straight day of losses, the longest losing streak since February 1978. The S&P 500 index was headed for its eighth straight loss.
Investors are becoming increasingly focused on the poor state of the U.S. economy. Shortly after the market opened, the Institute of Supply Management said its index measuring the service sector of the U.S. economy grew in July at the weakest pace in 17 months. Economists had expected a slight increase.
The report was the latest sign over the last week that the U.S. economy may be slowing. Consumer cut their spending in June for the first time in nearly two years; manufacturing slowed, and the government said that in the first half of the year the economy grew at its slowest pace since the recession ended in June 2009.
“There has been too much at the same time for investors to hang in there and you’re starting to see some element of panic finally showing up,” said Andrew Goldberg, U.S. market strategist at JP Morgan Funds.
The Dow Jones industrial average was down 101 points, or 0.9 percent, to 11,765 in early afternoon trading. The S&P 500 was down 10 points, or 0.8 percent, to 1,245. The S&P is now down 1.3 percent for the year.
The Nasdaq composite fell 10, or 0.4 percent, to 2,660.
Companies that depend most on an expanding economy in order to make profits had the steepest losses. Caterpillar Inc. fell 3 percent, the most of the 30 stocks in the Dow average, followed by Chevron Corp. All 10 industry groups in the S&P index lost ground.
Along with the U.S. economy, investors were also unnerved by a surge in bond yields to 14-year highs for Italy and Spain. High bond yields typically indicate that investors believe there is a greater chance that a country or corporation will be unable to make interest payments.
“We’ve been so focused inwardly because of the debt ceiling debate that we’ve ignored Europe over the last couple of weeks,” said J.J. Kinahan, chief options strategist at T.D. Ameritrade. “We have problems, but if Italy falls the euro zone doesn’t look sustainable.”
The S&P 500, the most widely used measure of the stock market, is headed for its eighth straight day of losses. It is down 7.6 percent since July 22. The last time the S&P had eight consecutive losses was in October 2008, at the height of the financial crisis. That slump was far worse, erasing 22.9 percent of the index’s value.
The yield on the 10-year Treasury note fell to another low for the year of 2.57 percent, from 2.62 percent Tuesday, as investors moved money into assets that hold up better during economic downturns. Gold, another traditional safe haven, rose nearly 2 percent to $1,671 an ounce.
Several large U.S. companies reported earnings before the market opened. MasterCard rose nearly 6 percent after the company beat analysts’ estimates. Clorox fell 2 percent after the company said higher commodity costs were eating into its income.
Payroll processor ADP said private companies added 114,000 jobs last month. The number was within Wall Street’s forecasts, but still well below the rate of growth that signifies a healthy jobs market. ADP’s employment figures do not always predict the government’s broader employment report, which will be released Friday morning. Last month, for example, ADP reported that private employers added 157,000 jobs in June. The government later said that private companies added just 57,000 jobs.
Economists expect that 90,000 were created in the U.S. last month. That’s fewer than the 125,000 jobs per month that are needed just to keep up with population growth. At least 250,000 jobs need to be created every month to substantially bring down the unemployment rate.
Analysts predict that the unemployment rate was 9.2 percent in July, unchanged from the month before.