As if it wasn’t bad enough that equities coughed up all of Tuesday’s post-holiday weekend rally on Wednesday, stocks kept heading southward and eventually closed at their lowest level in nearly seven weeks.
The Dow Jones Industrial Average tumbled 280 points, or 2.2%, to 12,290 , the Nasdaq fell 66 points, or 2.3%, to 2769 and the S&P 500 sank 31 points, or 2.3%, to 1315.
That march lower by stocks also takes them to their level of four months ago, meaning no ground has been gained since Feb. 1 — and that stocks have now only gained about 4.5% in 2011.
In reality, it was probably asking a lot of investors, who had enjoyed four straight bounce-back winning sessions ending Tuesday amid a dearth of economic or corporate data (as well as bracketing a holiday weekend), to go another full week without another reality check.
Unfortunately, for bulls, that came in a 1-2 punch early Wednesday with an ADP employment report and ISM Manufacturing Survey that not only disappointed with respect to headline expectations but forced investors to consider the prospects for stocks if the economic recovery refuses to strengthen — or worse, starts sliding backward.
Those concerns were seen in other investment vehicles — most notably bonds, where the yield on the 10-year Treasury note dipped below 3% for the first time since Dec. 6.
Commodities, too, took a hit for the most part: Crude oil finished 2.4% lower at $100.29 and silver prices fell nearly 2%. Gold, with its dual-nature flight-to-safety qualities added 0.4%.
Wednesday’s bearishness also was exhibited by the hammering taken by transportation stocks, where a giveback in oil prices wasn’t enough to offset fears that industry demand could be less than hoped for. The Dow Jones Transportation Average slid 3.4% — components Con-Way (NYSE:CNW) fell 4.6%, JetBlue (NASDAQ:JBLU) slid 4.2%, and Overseas Shipholding (NYSE:OSG) outdid them all with a 4.7% drop.
Small-caps also took a hit, with speculative fervor being the furthest thing from the mood of the day — the Russell 2000 fell 3.4% and is now back to being off more than 5% from its recent May 2 high.
Automaker stocks also took a dive amid companies reporting May sales numbers that continued to show an impact from production troubles and demand in Japan. General Motors (NYSE:GM) slipped 5% as its total sales in May fell 1% from a year earlier while month-end dealer inventory hit another all-time record of 584,000 vehicles.
