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NEW YORK (CNNMoney) — A sell-off in U.S. stocks accelerated Tuesday as investors read two economic reports showing sluggishness in the U.S. economy.
The Dow Jones industrial average, the SP 500 and the Nasdaq all traded down between 0.5% and 0.7%. The Dow dropped as much as 100 points in morning trading.
“We keep seeing this slow deterioration of economic data,” said Ryan Detrick, equity strategist at Schaeffer’s Investment Research. “These numbers put us in limbo, because investors keep hoping that bad numbers will force the Federal Reserve to offer a fix.”
Manufacturing activity in the U.S. dropped for the third straight month, and construction spending also slowed.
Investors are watching all economic numbers to see how they will influence the equation when the Fed decides whether it will announce more quantitative easing at its Sept. 12-13 policy meeting.
Even with Tuesday’s sell-off, investors are still waiting to take cues from jobs numbers due out Friday and to see what Europe’s central bankers will do to protect the vitality of the euro.
In his speech last week, Federal Reserve Chairman Ben Bernanke indicated that additional stimulus could be on the way, saying that the central bank is still willing to do whatever it takes to support the economy.
Meanwhile, Europe will once again be in focus after Moody’s warned that the European Union’s Aaa credit rating was at risk. Moody’s revised its outlook on the EU to “negative” from “stable.”
As Eurozone leaders return from summer holidays, investors are bracing for several key events in the euro area this month, starting with a crucial meeting of the European Central Bank on Thursday.
ECB President Mario Draghi is widely expected to unveil details of a new bond-buying program for eurozone governments that agree to certain conditions. But it remains to be seen if Draghi, who many view as the euro’s savior, will meet investors’ high expectations.
U.S. stocks finished higher Friday following a bounce from Bernanke’s speech.
Chinese manufacturing contracted for the first time in nine months, adding pressure on Chinese government authorities to take steps to reverse the slowdown.
Economy: The Institute for Supply Management’s ISM Manufacturing Index for August will be released at 10 a.m. ET Tuesday. The index is expected to come in at 50.0, according to a survey of analysts by Briefing.com, up from 49.8 in July.
Also on tap for Tuesday morning, the Census Bureau will release figures for July construction spending, which is expected to have risen by 0.5%.
Facebook’s stock fell 2% to below $18 a share, another new low for the social network.
Campbell Soup (Fortune 500) posted better-than-expected earnings Tuesday morning, sending shares of the company higher. ,
Smithfield Foods (Fortune 500) reported earnings of 40 cents per share, coming in bellow analyst expectations. The company cited growth in its packaged meat business, but poor performance of its fresh pork business dragged on profits. ,
Oil for October delivery shed 60 cents to $95.90 a barrel.
Gold futures for December delivery added $11.80 to $1,699.70 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield sharply lower to 1.56% from 1.62% late Friday.