US STOCKS-Market drops on renewed economic fears
(Updates to midmorning)
By Caroline Valetkevitch
NEW YORK, Jan 2 (Reuters) - U.S. stocks fell sharply after data showed U.S. factory activity contracted in December to its weakest since April 2003, underscoring worries about the economic slowdown.
Another report showed U.S. construction spending unexpectedly rose, but private home-building fell to its lowest rate since August 2003.
Shares of companies sensitive to economic cycles were among top decliners, including heavy equipment maker Caterpillar Inc. (CAT.N), down 1.7 percent at $71.31, as investors worried about slowing business activity.
"It could be a slowdown that's a little deeper, and that's not built into the targets for the stock market," said Joseph Battipaglia, market strategist at Stifel Nicolaus in Philadelphia.
Also weighing on major indexes were shares of chip maker Intel Corp (INTC.O), down 4.3 percent at $25.51, after Banc of America cut its rating on the stock. For details, see [ID:nBNG45144].
The Dow Jones industrial average .DJI was down 115.18 points, or 0.87 percent, at 13,149.64. The Standard & Poor's 500 Index .SPX was down 9.34 points, or 0.64 percent, at 1,459.02. The Nasdaq Composite Index .IXIC was down 14.76 points, or 0.56 percent, at 2,637.52.
The Dow Jones home construction index .DJUSHB was down 7.4 percent after the data.
Stocks opened flat, with gains in energy shares helping to offset downgrades in the chip sector. (Additional reporting by Jennifer Coogan; Editing by Kenneth Barry)
