Stocks extends losses after economic forecast falls short of analyst estimates

Stocks lower after economic forecast misses mark

NEW YORK — A worse-than-expected economic forecast is sending stocks lower in early trading.

The Conference Board says its index of leading economic indicators increased 0.6 percent in August, slightly less than the 0.7 percent increase expected by economists. Still, it marked the fifth straight month of gains in the index.

News of Dell’s plans to buy information technology company Perot Systems for about $3.9 billion also did little to invigorate investors who have taken stocks up more than 50 percent since early March. Analysts say breaks in the rally are healthy.

The Dow Jones industrial average is down 82 at 9,737, after being down about 60 points prior to the data. The Standard & Poor’s 500 index is down 9 at 1,058, while the Nasdaq composite index is down 10 at 2,121.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

NEW YORK (AP) — Stocks followed overseas markets lower Monday, pausing after a recent surge.

All the major European indexes declined in afternoon trading there after stocks fell in Asia overnight. Commodities like oil and gold also retreated, while the dollar inched higher. Bond prices rose.

News of Dell Inc.’s plans to buy information technology company Perot Systems Corp. for about $3.9 billion did little to invigorate investors who have taken stocks up more than 50 percent since early March.

Analysts say breaks in the rally are perfectly healthy.

“This is what should happen, needs to happen, is going to happen along the way but it doesn’t mean we’re headed down significantly from here,” said Jordan Smyth, managing director at Edgemoor Investment Advisors in Bethesda, Md.

The benchmark Standard & Poor’s 500 index tacked on a 2.5 percent gain last week, bringing its total rise since March to 58 percent, after Federal Reserve Chairman Ben Bernanke declared the U.S. recession was “likely over.” Investors are now waiting to see what the rest of the Fed has to say this week during its two-day rate-setting meeting, which begins Tuesday.

Meanwhile, a private sector group’s forecast of economic activity on Monday should provide further evidence that the recession is ending. The Conference Board’s index of leading economic indicators is expected to have risen 0.7 percent in August. The index, which is meant to project economic activity in the next three to six months, climbed 0.6 percent in July.

In early trading, the Dow Jones industrial average fell 62.05, or 0.6 percent, to 9,758.15. The Standard & Poor’s 500 index lost 7.44, or 0.7 percent, to 1,060.86, while the Nasdaq composite index fell 8.71, or 0.4 percent, to 2,124.15.