Stocks drop; jobs data due

August 31, 2010 at 12:00a.m.

Associated Press

NEW YORK

Stocks fell in thin trading Monday after more signs of slowing economic growth got investors worried ahead of a key report on jobs later this week.

The Dow Jones industrial average lost ground throughout the day and closed with a loss of 141 points. Other indexes also fell more than 1 percent. Bond prices rose, sending interest rates lower, as money moved back into the Treasury market.

The latest cause for worry on the economy came in a report early Monday showing that personal incomes rose less than expected in July. That added to a series of discouraging economic indicators recently suggesting that growth could slow down in the second half of the year.

“The personal-income report did little to ease the nervousness about the trajectory of the economy,” said Alan Gayle, senior investment strategist at RidgeWorth Investments. The report did show spending was up in July, but without consistent growth in income, any increase in spending likely is temporary, Gayle said.

Investors have been focusing on employment data as a way of predicting where the economy is going. Signs of a slowdown in growth have plagued the market for more than a month. Investors are unsure if companies will be able to keep up strong earnings growth if the recovery runs out of steam or falls back into recession.

Investors have been betting in recent weeks that the weaker economic reports will translate into smaller earnings than previously thought. That, in turn, has helped drive stocks lower to match the diminished expectations.

The Dow fell 140.92, or 1.4 percent, to close at 10,009.73. The Standard & Poor’s 500 index fell 15.67, or 1.5 percent, to 1,048.92, and the Nasdaq composite index fell 33.66, or 1.6 percent, to 2,119.97.