Stocks Slump on Spending Data

Stocks slid Thursday for a third straight session, slicing 115 points from the Dow Jones industrial average, after a larger-than-expected drop in durable goods orders raised new questions about the economy and corporate profits.

Wall Street saw the Commerce Department’s report on durable goods -- big-ticket items designed to last at least three years -- as another in a line of signs that consumer spending could decelerate, slowing economic growth. Orders for durable goods fell 2.1% in September, more than the 1.5% drop that analysts had forecast.

“We’re starting to see some slowing in the economy,” said Dirk van Dijk, director of research at Zacks Investment Research Inc. “I don’t think we’re going into a recession, but Bernanke is going to have his hands full.”

President Bush this week nominated Ben S. Bernanke, chairman of the president’s Council of Economic Advisors, to succeed Federal Reserve Chairman Alan Greenspan.

Investors also remained concerned that the Fed, in raising interest rates to quash inflation, would further slow economic growth and company earnings by making capital more expensive for firms looking to expand. The Fed meets Tuesday and is expected to raise the nation’s benchmark short-term rate by a quarter percentage point, to 4%.

The Dow fell 115.03 points, or 1.1%, to 10,229.95.

Broader stock indicators also lost ground. The Standard & Poor’s 500 index dropped 12.48 points, or 1.1%, to 1,178.90, and the Nasdaq composite lost 36.24 points, or 1.7%, to 2,063.81.

In active trading, nearly three stocks were down for every one that rose on the New York Stock Exchange, in the broadest sell-off in three weeks.

Crude oil futures moved higher. A barrel of light crude settled at $61.09, up 43 cents, in New York trading.

Bond yields retreated, with the 10-year Treasury note falling to 4.55% from 4.59% on Wednesday. Bond prices, which move opposite to yields, were pummeled in the early half of the week as investors worried about interest rates and inflation.

In other economic news, new-home sales rebounded at a faster-than-expected pace in September, rising 2.1%. But sales are well below the year’s highs, and the median price of new homes sold last month fell by 5.7%, indicating that the housing market may be weakening.

Shares of home builders were broadly lower. KB Home fell $3.16 to $61.37, Lennar dropped $2.11 to $53.33 and Ryland sank $2.47 to $64.94.

Traders are watching home sales, worried that a decline in housing values might curb consumer spending. Greenspan has said borrowing against homes added $600 billion to consumers’ spending power last year.

In other market highlights:

* Semiconductor stocks pulled the tech sector down. Texas Instruments dropped 73 cents to $27.47, Broadcom lost $1.62 to $41.31 and Advanced Micro Devices fell $1 to $21.82.

* Goodrich tumbled $6.31 to $36.74. The aerospace parts maker said it expected “significant increases” in pension, foreign-exchange and stock-based compensation costs in 2006.

* Liz Claiborne slid $3.73 to $34.56. The clothing maker cut its per-share profit forecasts for this year and next.

* On the plus side, Georgia-Pacific rose 71 cents to $32.35 after its third-quarter results fell less than expected. ITT Educational Services jumped $5.81 to $54.49 on its earnings report.

* General Motors lost $1.98 to $27.19. GM said late Wednesday that it was being investigated by the Securities and Exchange Commission over its pension accounting and transactions with auto-parts maker Delphi.

Ford fell 38 cents to a 52-week low of $8.14; DaimlerChrysler slid $1.05 to $48.80.