Stocks lower as Philly Fed index drops

NEW YORK – Stocks pulled back Thursday after economic data pointing to weakness in regional manufacturing and a slowing U.S. economy weighed on investor sentiment. Trading was light ahead of the holiday weekend.

Stocks fell after the Philadelphia Federal Reserve’s December business index, which gauges regional manufacturing activity, came in at a negative 4.3 compared with a positive reading of 5.1 in November. It was the weakest showing since 2003.

Before release of the Philadelphia Fed report, investors shrugged off news that the economy grew at a slower pace in the third quarter than had been estimated. Gross domestic product fell to 2 percent in the third quarter amid a cooling real estate market; the Commerce Department estimated a month ago that the reading would be closer to 2.2 percent.

“I think with the low volume nobody is really around to trade the stuff,” said Ryan Larson, senior equity trader at Voyageur Asset Management, a unit of RBC Dain Rauscher. “So I wouldn’t put too much credence in this pullback.”

The Dow Jones industrial average fell 42.62, or 0.34 percent, to 12,421.25.

Broader stock indicators also lost ground. The Standard & Poor’s 500 index slipped 5.22, or 0.37 percent, to 1,418.31, and the Nasdaq composite index lost 11.76, or 0.48 percent, falling to 2,415.85.

Bonds rose sharply on the weaker economic data, with the yield on the benchmark 10-year Treasury note falling to 4.55 percent from 4.60 percent late Wednesday. The dollar was lower against other major currencies, while gold prices fell.

Light, sweet crude oil fell $1.06 to $62.66 per barrel on the New York Mercantile Exchange.

The Russell 2000 index of smaller companies fell 2.66, or 0.34 percent, to 782.90.

Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where volume came to 1.35 billion shares, compared with 1.37 billion traded Wednesday.

Overseas, Japan’s Nikkei stock average closed up 0.22 percent. Britain’s FTSE 100 closed down 0.24 percent, Germany’s DAX index was down 0.20 percent, and France’s CAC-40 was down 0.07 percent.