Investors dumped high-flying technology and biotech companies and sent the stock market down for a third straight day Wednesday.
Major indexes drifted lower in early trading, following news that orders for long-lasting U.S. goods sank last month. The selling gathered strength in the afternoon, with companies like Avago Technologies and Skyworks Solutions losing the most.
Peter Cardillo, chief market economist at Avalon Partners, a New York brokerage, said the market's fall was driven by big investors selling some of their winnings before the first quarter closes next week. The drop in factory orders also raised concerns that a slowdown in economic activity could continue.
"A weak first quarter could spill into the second quarter," Cardillo said, "and that probably leads to a poor earnings season."
The Standard & Poor's 500 index lost 30.45 points, or 1.5 percent, to 2,061.05. The Dow Jones industrial average fell 292.60 points, or 1.6 percent, to 17,718.54, while the Nasdaq composite fell 118.21 points, or 2.4 percent, to 4,876.52.
It was the worst day for stocks since March 10, when speculation over the Federal Reserve's plans to raise interest rates helped knock the S&P 500 down 1.7 percent.
Jack Ablin, chief investment officer at BMO Private Bank, said he thinks it's going to be tough for the market to sustain a strong run higher. Major indexes still trade near record highs reached at the start of the month, even though analysts expect earnings to shrink in the first half of the year. That makes the typical stock look pricey.
"We're going to have a difficult time continuing to make new highs if the underlying economy isn't following the direction of the market," he said. "At some point we're going to hit the intersection of reality and expectations."
Before the market opened on Wednesday, the Commerce Department reported that orders to U.S. factories for long-lasting manufactured goods fell in February for the third time in four months. Demand for commercial aircraft, cars and machinery waned.
"You can put this durables report into your Surprise Index as it missed market expectations," said Christopher Rupkey, chief financial economist at MUFG Union Bank, in a note to clients. "But more importantly it is another piece of data that shows the real GDP economy is running 2 percent and not 3 percent."
Among companies making big moves, H.J. Heinz and Kraft Foods announced plans to merge in a deal that would create one of the world's largest food companies. The merger was engineered by Heinz's owners, Warren Buffett's Berkshire Hathaway and Brazilian investment firm 3G Capital, and still needs a nod from federal regulators and Kraft shareholders. Kraft's stock shot up $21.85, or 36 percent, to $83.17.
Apollo Education Group turned in a quarterly loss as enrollment fell at its for-profit University of Phoenix. The company's stock plunged $7.95, or 28 percent, to $20.04.
Major indexes closed with losses across Europe. Germany's DAX dropped 1.2 percent and France's CAC 40 lost 1.3 percent. Britain's FTSE 100 sank 0.4 percent.
U.S. government bond prices fell, pushing the yield on the 10-year Treasury note up to 1.93 percent.
In the commodity markets, gold rose $5.60 to settle at $1,197 an ounce and silver inched up 2 cents to $17 an ounce. Copper slipped a penny to $2.79 a pound.
The price of U.S. crude rose amid concerns of spreading turmoil in the Middle East after Saudi Arabia reportedly began amassing troops near its border with strife-torn Yemen. Benchmark U.S. crude rose $1.70 to close at $49.21 a barrel in New York. Brent crude, a benchmark for international oils used by many U.S. refineries, rose $1.37 a barrel to close at $56.48 a barrel in London.
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