updated 10/28/2005 9:24:57 AM ET 2005-10-28T13:24:57

Stocks fell sharply Thursday, with the Dow Jones industrial average chalking up a triple-digit loss, after a larger-than-expected decline in durable goods orders exacerbated worries about a slowing economy.

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Wall Street got sobering news from the Commerce Department, which said orders to U.S. factories for big-ticket durable goods fell 2.1 percent in September . Economists had been expecting a 1.5 percent drop in orders for durable goods, which are items expected to last at least three years. Transportation orders were hurt by the Boeing strike, since settled, but orders for computers, electrical equipment and appliances also fell sharply.

“We’re starting to see some slowing in the economy,” Dirk van Dijk, director of research at Zacks Investment Research Inc. “I don’t think we’re going into a recession, but (new Federal Reserve Chairman Ben) Bernanke is going to have his hands full.”

Separately, unemployment claims due to hurricanes Katrina and Rita have now climbed above the half-million mark , with further increases expected in coming weeks from Hurricane Wilma. The Labor Department said an additional 24,000 people who lost jobs because of the storms filed for unemployment benefits last week, pushing the total for the past eight weeks to 502,000 hurricane-related claims.

Bonds rose, with the yield on the 10-year Treasury note falling to 4.57 percent from 4.59 percent late Wednesday. Bonds were hammered in the early half of the week as investors worried about interest rates and inflation. The U.S. dollar was lower against other major currencies in European trading. Crude oil futures fell.

The Dow Jones industrial average finished the day down 115.03 points, or 1.1 percent, while the broader Standard & Poor’s 500-stock index fell 12.48 points, or 1.1 percent. And the technology-rich Nasdaq composite index tumbled 36.24 points, or 1.7 percent.

In other economic news, new home sales rebounded at a slower-than-expected pace in September, rising 2.1 percent. However, new home sales are well below the year’s highs and the median price of new homes sold last month fell by 5.7 percent, indicating that the booming housing market may be slowing.

Traders are watching home sales carefully, worried that a decline in housing prices might curb consumer spending. Outgoing Federal Reserve Chairman Alan Greenspan has said that borrowing against homes added $600 billion to consumers’ spending power last year. A sustained decline in home prices would “shut down the housing ATM, which is massive,” van Dijk said.

Even if home sales stay strong, investors will continue to worry about consumer spending. In a report Wednesday, Lehman Brothers called rising home prices, low mortgage rates and declining energy prices “props to consumer spending” that could weaken or collapse at some point in 2006.

Oil and gas giant Exxon Mobil Corp. rose 3 cents to $56.23 after reporting its best quarterly earnings ever . Third-quarter profits were buoyed by higher crude oil and natural gas prices, even as the period’s hurricanes hampered production. But earnings excluding items fell below analysts’ expectations.

Goodyear Tire & Rubber Co., one of the world’s largest tire makers, rose $1.67 to $15.05 after its third-quarter profit surged to the highest quarterly level in seven years, as higher prices and new products helped offset increased raw materials costs and boosted sales 7 percent.

General Motors Corp. shares fell $1.29 to $27.88 after the company said it received a Securities and Exchange Commission subpoena for documents about pensions and post-retirement benefits, as well as its dealings with parts maker Delphi Corp.

Shares of Baidu.com Inc. plunged, falling $9.83 to $71.22, after the Internet company posted quarterly earnings that beat analysts’ expectations but still disappointed investors who had bet on even faster growth for the biggest online portal in the booming Chinese market.

Overseas, Japan’s Nikkei stock average rose 0.16 percent. In Europe, Britain’s FTSE 100 fell 0.86 percent, Germany’s DAX index was down 1.93 percent and France’s CAC-40 fell 1.73 percent.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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