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US demand for durable goods and new homes plunged in August, and weekly jobless claims surged: a triple dose of bad economic data.
Orders for durable goods decreased by 4.5 per cent last month to a seasonally adjusted $US208.5 billion ($250 billion), the Commerce Department said.
New-home sales dived 11.5 per cent to 460,000, the lowest mark in 17 years, Commerce said in a separate report. The Labour Department said new claims for jobless benefits jumped by 32,000 on a seasonally adjusted basis to 493,000 in the week ended September 20.
"The market has taken three straight punches to the jaw today," said Patrick Newport, an economist at Global Insight.
Still, the Dow Jones Industrial Average closed up 196.89 points, or 1.82 per cent, at 11,022.06 on [misplaced] optimism about a deal in Washington to bail out Wall Street.
Durables are manufactured goods designed to last at least three years. The report was much worse than Wall Street expected; economists had forecast a decline of 2 per cent for August. The 4.5 per cent drop was the sharpest since 4.7 per cent in January. It followed three consecutive increases. Orders in August fell in virtually every big category.
"The economy is clearly in a sinking spell, and this report does not offer any signs that that's going to end anytime soon," said Hugh Johnson, chief investment officer of Johnson Illington Advisors.
Forward-looking indicators within the report, durable orders excluding the transportation sector and orders excluding defence, both plummeted, down 3 per cent and 5 per cent, respectively.
A barometer of business equipment spending - orders for non-defence capital goods excluding aircraft - decreased in August by 2 per cent, after going up 0.4 per cent in July.
"This was an ominous report," said Mr Newport. "Nearly every shipments and orders category posted a loss."
Demand for durable goods in the transportation sector decreased 8.9 per cent.
Orders fell 6.2 per cent for machinery. Primary metals tumbled 9.3 per cent, the biggest drop since 10.8 per cent in April 1993.
