another bad sign
Stocks Drop on Service Sector Weakness
Tuesday February 5, 9:52 am ET
By Madlen Read, AP Business Writer
Stocks Decline Sharply As Weak Service-Sector Report Stirs Concerns About Economy's Health
NEW YORK (AP) -- Wall Street pulled back sharply for the second straight session Tuesday, after an unexpected contraction in the service sector rekindled investors' worry that the economy is headed for recession. The Dow Jones industrial average fell more than 200 points.
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The Institute for Supply Management's January report on the service sector, which accounts for about two-thirds of the economy, came in well short of Wall Street's forecast. The index dropped to 44.6 last month from a revised reading of 54.4 in December.
A reading below 50 indicates contraction; it was the first service-sector contraction in more than four and a half years. Analysts had been expecting another month of growth.
The weak ISM report sapped Wall Street's already-dissipating enthusiasm over Microsoft Corp.'s bid for Yahoo Inc. Banc of America Securities lowered its rating on Yahoo to neutral from buy, saying the proposed acquisition could run up against regulatory challenges, according to Dow Jones. The bank said regulatory difficulties could be steepest in the European Union.
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