NEW YORK - More signs of a weak economy gave investors a reason to sell stocks for a second day.
Stocks extended their pullback yesterday after news of a seventh straight monthly drop in industrial production overshadowed better-than-expected reports on home construction, building permits and inflation.
All the major stock indexes fell more than 1 percent, and the Dow Jones industrial average lost 107 points, bringing its two-day drop to nearly 300 points, or 3.3 percent. Investors are nervous that a three-month surge in stocks might have been premature.
But analysts weren't surprised that investors were having second thoughts.
"It's unreasonable to think that the market is going to go straight up and never turn back," said Eric Ross, director of research at Canaccord Adams.
The Dow Jones industrial average fell 107.46, or 1.3 percent, to 8,504.67. The Standard & Poor's 500 index fell 11.75, or 1.3 percent, to 911.97, while the Nasdaq composite index fell 20.20, or 1.1 percent, to 1,796.18.
On Monday, the Dow tumbled 187 points, or 2.1 percent.
The dollar resumed its three-month fall against other major currencies yesterday, pushing prices for commodities higher.
The dollar's slide came after the Kremlin's top economic adviser said Russia may put part of its currency reserves in bonds issued by Brazil, China and India.
Light, sweet crude fell 15 cents to settle at $70.47 a barrel on the New York Mercantile Exchange. Precious metals, soybeans and coffee were among the other commodities closing higher.
The Commerce Department said home construction jumped in May by the largest amount in three months after hitting a record low in April.
The Labor Department said wholesale prices rose less than expected in May. But the Federal Reserve said industrial production fell a larger-than-expected 1.1 percent in May as the recession hurt demand for manufactured goods, including cars and household appliances.
Treasury yields retreated further, a welcome sign for homeowners. Yields on long-term Treasurys have been climbing as demand for bonds weakens amid a huge surplus of government debt. This is worrisome to investors because Treasury yields are linked to mortgages and other consumer loans, and higher borrowing costs could undermine a recovery in the housing market.