Stocks Trade Down on Souring Job Picture; Housing Market Stress

U.S. stocks fell Wednesday after reports showed the housing slump was deepening and spreading to the job market while slowing consumer spending.

The Dow Jones industrial average was down 143.39 points, or 1.07 percent, at 13,305.47. The Standard & Poor's 500 Index was down 17.13 points, or 1.15 percent, at 1,472.29. The Nasdaq Composite Index was down 24.29 points, or 0.92 percent, at 2,605.95.

Investor concerns about the health of the consumer were exacerbated when Costco Wholesale Corp. (COST) reported sales for August that fell short of expectations and Apple Inc (APPL) announced big price cuts on its new iPhones in an effort to spur sales.

Retail and technology shares fell broadly, with the Nasdaq snapping a four-session winning streak.

Evidence of possible trouble for the economy came from reports showing that pending sales of previously owned homes plunged by a record 12.2 percent in July and that private employers hired the fewest workers in more than four years in August.

"Coming into the session, there was profit-taking due in part to the ongoing uncertainty with regard to the health of the credit markets. That selling accelerated after the weaker-than-expected home sales report," said Michael Malone, trading analyst with Cowen & Co. in New York.

Citigroup Inc fell 2.6 percent to $46 and was the top drag on the S&P 500 index after The Wall Street Journal said Citi and other banks could face financial exposure due to affiliated investment units that have issued short-term debt.

Shares of home builders declined, with the Dow Jones home construction index down 4.3 percent.

For a short period during the session, stocks extended losses after a Federal Reserve business survey suggested continued strength in the economy, which analysts said left open the question about the timing of an interest rate cut.

Earlier on Wednesday, the National Association of Realtors' Pending Home Sales Index, based on contracts signed in July, fell to a reading of 89.9, the lowest since September 2001 when the index stood at 89.8.

Also, the ADP National Employment survey showed private employers added 38,000 jobs last month, well short of the 83,000 economists had forecast.

The ADP report precedes Friday's non-farm payrolls report from the Labor Department, key data for the Fed in setting rates. Economists have speculated the Fed will not cut rates until signs of stress emerge in the labor market, which has remained relatively tight despite the slowdown in the housing market.

Apple shares slid 5.1 percent to $136.76 and were the top drag on the Nasdaq and second biggest weight on the S&P. Investors had pushed the stock up 17 percent in the two weeks leading up to the announcement. Shares of AT&T, the iPhone service provider, fell 1.4 percent to $39.73.

Shares of Costco, the largest U.S. warehouse club, slid after it reported that sales at stores open at least a year were well below analyst expectations in August.

Costco shares were down 4.2 percent to $59 on the Nasdaq. The S&P retail index declined 1.7 percent.

Trading was below average on the New York Stock Exchange, with about 1.39 billion shares changing hands versus last year's estimated daily average of 1.84 billion, while on Nasdaq, about 1.97 billion shares traded versus last year's daily average of 2.02 billion.

Declining stocks were outnumbering rising ones by a ratio of about 8 to 3 on the NYSE and by about 10 to 1 on Nasdaq.