U.S. stocks dropped after a report showing 157,000 job losses and falling production at the world’s largest steelmaker spurred concern the economy will worsen even as President-elect Barack Obama takes steps to stimulate growth.
Nucor Corp., the largest U.S.-based steel producer, fell 5.9 percent after ArcelorMittal doubled production cuts amid slowing demand. Transocean Inc., the world’s largest offshore oil driller, slid as much as 4.6 percent on profit that trailed the average analyst estimate. The market’s declines came a day after the biggest presidential Election Day gain in 24 years.
“I don’t know anyone who can say with any sort of real conviction that we’re in a bull market next year,” said Pat Becker Jr., chief investment officer at Becker Capital Management Inc. in Portland, Oregon, which oversees about $1.7 billion. “Bear markets can last years.”
The Standard & Poor’s 500 Index dropped 9.55 points, or 1 percent, to 996.2 at 10:40 a.m. in New York as a report showing a bigger-than-forecast contraction in service industries also weighed on stocks. The Dow Jones Industrial Average retreated 100.67, or 1.1 percent, to 9,524.61 and the Nasdaq Composite Index dropped 21.07, or 1.2 percent, to 1,759.05. More than three stocks fell for every two that rose on the New York Stock Exchange.
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The retreat halted an 18 percent rebound from the S&P 500’s five-year low on Oct. 27. The benchmark for U.S. equities has lost 32 percent this year, the steepest annual plunge since 1937, and Obama will have to contend with an economy pummeled by the fastest contraction in manufacturing in 26 years and the lowest consumer confidence.
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The report by ADP Employer Services showed more job cuts than economists had projected and precedes the Labor Department’s Nov. 11 release of employment data for October, expected to show U.S. payrolls shrank for a 10th straight month.