Stocks plunged today, with the Dow Jones industrial average down more than 300 points, as guarded optimism over a House vote on a financial rescue plan was overshadowed by gloomy news of a decline in factory orders and a seven-year high among those seeking unemployment.
The Dow closed down 348.22, or 3.22%, at 10,482.85; the S&P 500 fell 46.78, or 4.03%, ending at 1,114.28; and the Nasdaq composite closed down 92.68, or 4.48%, at 1.976.72. All numbers are preliminary.
With factory orders dropping a higher-than-expected 4% in August and jobless claims at a 7-year high, the days declines may reflect an appreciation that, even if the House of Representatives approves the plan as well later this week, the economic outlook at home and abroad remains bleak, said Hayes Miller, a portfolio manager and strategic policy group member with Baring Asset Management.
The bill before Congress might prevent a catastrophe, but that would simply put investors back where we were before, with rising unemployment, energy costs and debt depressing consumption growth at home, and little reason to cheer abroad either, Mr. Miller said. Barings strategic call for the market now calls for an underweight position in equities and a slight overweight in short-dated bonds and cash.