[NYTr] Crashing Economy: Sour 2008 Start - Stocks Punge on Oil Rise, Bad Mfg News

[All the News That Doesn't Fit]

AP via ABC News - Jan 2, 2008
http://www.abcnews.go.com/Business/MarketTalk/story?id=4076436&page=1


Sour Start to '08 For Wall Street

Stocks Plunge After the Price of Oil Skyrockets 
and on Bad Manufacturing News

By TIM PARADIS
AP Business Writer

NEW YORK (AP) -- Wall Street sank Wednesday after a
weaker-than-expected reading on the manufacturing sector and a spike in
oil prices to $100 a barrel triggered concerns of a further slowdown in
the overall economy.

The major indexes each lost more than 1 percent, with the Dow Jones
industrials giving up more than 200 points. It was the blue chip
index's biggest point decline for the first day of trading in a new
year.

The Institute for Supply Management's report that its manufacturing
index fell to 47.7 percent for December from 50.8 percent in November
raised concerns that the economy could be slowing at a quicker pace
than some investors had estimated. The reading below 50 signals
economic contraction, whereas readings over 50 indicate expansion.

Analysts polled by Thomson/IFR had anticipated that manufacturing would
expand modestly in December.

Light, sweet crude rose $3.64 to $99.62 per barrel on the New York
Mercantile Exchange after earlier hitting $100 for the first time. The
rise follows violence in the oil-producing nation of Nigeria, concerns
about weather-related production halts in Mexico and speculation that
inventory figures will show drops in levels of U.S. supplies.

The economic reading and rising oil prices were unwelcome for investors
wading into the first trading session of 2008 and indicated the
concerns that weighed on stocks in the second half of 2007 will for now
persist.

"It certainly is a soft number and the declines in production and new
orders are eye-catching," said Alan Levenson, chief economist at T.
Rowe Price Associates Inc. "Overall, the ISM has generally been a
decent guide for the economy. This is a sharp decline in one month."

Stocks failed to gain momentum after an initial bounce after minutes
from the Federal Reserve's last meeting. Central bankers, who voted to
raise interest rates a quarter percentage point, called the economic
outlook "unusually uncertain." While that strengthened the case for
lower rates, it also confirmed some of the market's worst fears about
the economy.

According to preliminary calculations, the Dow Jones industrial average
fell 220.86, or 1.66 percent, to 13,043.96. The blue chips briefly fell
below 13,000 for the first time since November.

Broader stock indicators also fell sharply. The Standard & Poor's 500
index slid 21.09, or 1.44 percent, to 1,447.27, and the Nasdaq
composite index fell 42.65, or 1.61 percent, to 2,609.63.

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