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Chicago Purchasing Managers Spoil The Rally

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A surprise drop in a key regional economic indicator sent stocks reeling in early trading Wednesday, with the Dow Jones industrials tumbling more than 100 points.

The Chicago Purchasing Managers Index fell to 46.1 in September rather than rising to the 52 that economists expected. The index, considered a precursor to the national Institute for Supply Management index to be released on Thursday, pointed to a Midwestern manufacturing sector than is weaker than had been expected.


The news punctured a mild stock rally that had followed an upward revision in the Commerce Department’s final report for the second-quarter gross domestic product. The government said the GDP, the broadest measure of the economy, sank at a pace of just 0.7 percent in the spring. The new reading was better than the annualized 1.1 percent drop that economists were predicting.

But the Chicago PMI data is fresher, and therefore more troubling, than the GDP reading. And it reminded investors that the economy still has major obstacles to be overcome before a solid recovery can occur.

In the first hour of trading, the Dow fell 115.70, or 1.2 percent, to 9,626.50. The Standard & Poor’s 500 index dropped 12.49, or 1.2 percent, to 1,048.12. The Nasdaq composite index skidded 26.41, or 1.2 percent, to 2,097.63

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