Dow tumbles on bleak economic prospects

NEW YORK (AP) – Stocks closed moderately lower Friday as investors’ pessimistic view of the economy deepened.

The Dow fell 57.59, or 0.6 percent, to 10,213.62. The Standard & Poor’s 500 index fell 3.94, or 0.4 percent, to 1,071.69, while the Nasdaq composite index rose 0.81, or 0.04 percent, to 2,179.76.

There was little reason for investors to buy. There were no reports to offset Thursday’s disappointing news that growth in the domestic economy continues to slow. The Dow Jones industrial average fell 57 points a day after falling 144. The other major indexes also fell moderately.

“We’re not seeing any significant growth prospects,” said Peter Costa, president of Empire Executions. “Why be in the market if there’s no (near-term) prospects for growth?”

Oil prices fell again on worries that future demand will wane if economic growth remains tepid. Energy stocks were among the worst performers on the day, including oil companies Chevron Corp. and ConocoPhillips.

Overseas markets also fell, reacting to reports Thursday that initial claims for unemployment benefits in the U.S. rose last week and manufacturing in the Mid-Atlantic region shrank.

“We’re probably on a continuation from yesterday’s disturbing claims number,” said Paul Zemsky, head of asset allocation at ING Investment Management. “There’s really nothing to hang your hat on.”

About three stocks fell for every two that rose on the New York Stock Exchange, where volume came to 1.1 billion shares.

Traders’ vacations have left volume exceptionally low this month. The uncertainty about the economy has made those who are working hesitant to make any big moves.

Data has shown in recent months that private employers are reluctant to hire new workers because they are unsure how strong business will be in the coming quarters. That, in turn, has people worried about their jobs and spending less. But until spending picks up, unemployment could remain high. The vicious circle has investors turning away from stocks.

Mark Luschini, chief market strategist at Janney Montgomery Scott, said companies are also reluctant to hire because of worries about taxes and government programs like the health care reform passed earlier this year.

“The uncertainty that exists on regulatory and income taxes has (employers) in stall mode,” Luschini said. Companies are worried about whether higher taxes and costs associated to regulation reform will impact profit margins and cause shoppers to reduce spending if they are paying more taxes, Luschini said.