Wall Street recap: Job, manufacturing news pounds stocks

Manufacturing activity, job data pound stocks

NEW YORK Stocks began the fourth quarter with their worst drop in three months after reports on manufacturing and the job market reawakened investors' pessimism about the economy.

The Dow Jones industrial average tumbled 203 points yesterday, while all the major indexes fell between 2 percent and 3 percent. The slide intensified in the final minutes of the day, signaling that traders were growing nervous ahead of the government's key September jobs report due before the opening bell today.

It was the sixth drop in seven days for stocks and another reminder of how fragile the market's seven-month rally has become. The economic reports added urgency to questions about how strong the recovery is.

"Fear is still very, very fresh in people's minds and the magnitude of the potential disaster that we had last September through March, I think still has investors pretty skittish," said Darell Krasnoff, managing director of Bel Air Investment Advisors in Los Angeles.

The latest worries erupted when the Labor Department said new claims for jobless benefits rose last week to 551,000. The mood on Wall Street darkened when the Institute for Supply Management said its index of manufacturing activity in September fell rather than rose as analysts had expected.

The Dow fell 2.1 percent, to 9,509.28, its lowest close since Sept. 8.