EW YORK (Reuters) – Stocks fell on Tuesday as investors fretted that prices may have run too far ahead of the economic recovery even as data showed the U.S. manufacturing sector expanded in August after a long slump.

Analysts said the ISM manufacturing data had already been priced into the market after a series of earlier regional reports, while better-than-expected home sales were supported by government incentives.

“The rally has really discounted a lot of this expected growth and V-shaped recovery talk,” said Alan Lancz, president of Alan B. Lancz & Associates Inc in Toledo, Ohio. “It’s a tug of war between investors still jumping in and investors that might want to be locking in profits before a long weekend.”

The Dow Jones industrial average (DJI:^DJI – News) dropped 125.00 points, or 1.31 percent, to 9,371.28. The Standard & Poor’s 500 Index (^SPX – News) fell 11.56 points, or 1.13 percent, to 1,009.06. The Nasdaq Composite Index (Nasdaq:^IXIC – News) lost 17.42 points, or 0.87 percent, to 1,991.64.

An S&P index of financial shares (^GSPF – News), which had led the recent rally, tumbled 2.6 percent.

This is the last full trading week before the three-day Labor Day holiday weekend. Markets will be closed on Monday, September 7, for the holiday.

(Reporting by Edward Krudy and Leah Schnurr; Editing by Jan Paschal)

source: Yahoo Financew

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