Stocks close sharply lower, though off their worst levels of the day. The DJIA, S&P 500 and Nasdaq end down 2%. It's the deepest one-day decline for the Dow in over two weeks. Worries over lingering financial company risks and profit-taking after a multimonth rally have stumped the averages in three straight sessions.
Stocks got little traction from positive economic data, as Wall Street has already priced in modest signs of recovery.
The Institute for Supply Management said its index of manufacturing activity rose to 52.9 in August, up from 48.9 in July and well above the reading of 50.5 analysts had been expecting. A figure above 50 signifies growth. This was the first move above 50 since January 2008.
The National Association of Realtors said its index of pending U.S. home sales rose 3.2% in July to 97.6, more than the 96.5 forecast by analysts and the highest level in more than two years. It also was the sixth straight increase.
The Commerce Department also said home building had its best performance in 10 months although construction spending inched lower in July.
eBay (
EBAY) says it is selling 65% of its Skype Internet phone unit to a group of private investors for $1.9 billion. Shares give up earlier gains made before the confirmation.
Yahoo! (
YHOO) shares are softer after activist investor Carl Icahn said in a SEC filing he has sold 12.7 million YHOO shares in the last 60 days, reducing his stake below 5%. The filing said the sale was made to reshuffle stock portfolios.
Financial shares were lower. AIG (
AIG) is under selling pressure, extending the 2.1% slide recorded in Monday's evening trade after the company, its former Chairman and Chief Executive Officer Maurice Greenberg, and its former Chief Financial Officer Howard Smith jointly announced they have agreed on terms for binding arbitration of various legal disputes between AIG, and Greenberg and Smith. Shares also got downgraded this morning to "underperform" at Sanford C. Bernstein.
Bank of America (
BAC) erased early gains made after BAC offered to repay part of the $45 billion in bailout money it received from the U.S. government under the Troubled Asset Relief Program, or TARP, according to the Wall Street Journal.
Telecom shares were mixed on analyst actions.
