Market goes Dow-n for 3rd day

STOCKS TOOK a beating Wednesday as investors saw little to like in a disappointing economic report.

The Dow fell for the third day in a row, dropping 293 points, or 1.6%, to 17,719, after the Commerce Department reported a surprise 1.4% decline in orders for durable goods in February. Economists had been looking for an increase of 0.2%.

A number of factors contributed to February’s decline: the cold weather, the sharp slowdown in the energy sector, the strong dollar — which hurts corporate profits — and a work stoppage at ports on the West Coast, which slowed production.

The latter issue has been resolved, with the ending of the labor dispute.

But economic growth in the first quarter will continue to be weighed down by oil’s weakness and the strong dollar. Economists lowered their firstquarter Gross Domestic Product forecasts Wednesday.

“I would expect we will see continued weakness in orders,” Chris Low, chief economist at FTN Financial, told the Daily News.

Low, who had already been bearish ahead of the report, maintained his firstquarter GDP growth forecast of 1.5%.

The slowdown is seen as temporary, and economic activity is expected to pick up in the second half of the year.

But the report raises questions about when the Federal Reserve will proceed with raising interest rates.

Last week, the Fed said it would consider raising rates as early as June.

Normally, the stock market reacts favorably when economic data indicate reasons the Fed might be reluctant to raise rates.

But the strong dollar has investors worried about big companies that export goods. A strong U.S. dollar makes U.S. goods more expensive for foreign consumers.

The dollar has gained about 13.2% against the currencies of America’s main trading partners since last June, on expectations of a Fed rate hike this year.

Companies in the S&P 500 derive close to half of their sales from exports, according to the S&P Dow Jones indexes.

“One thing the market is sensitive to is when weak data are connected to the strong dollar,” Low said. “It means it will hurt earnings.”