Stocks Sink as U.S. Manufacturing Slumps
NEW YORK ( TheStreet) -- Major U.S. stock averages fell Monday after a slump in manufacturing outweighed upbeat eurozone developments and manufacturing data from China.
The U.S. Institute for Supply Management's manufacturing index showed a decline to 49.5 in November from 51.7 in October. A reading below 50 points is indicative of contraction. Economists expected the index to fall to 51.3.
Meanwhile, the Census Bureau said Monday that construction spending rose 1.4% in October after increasing by a downwardly revised 0.5% in September. Economists forecast construction spending to rise 0.5% in October.
Republicans also announced late on Monday a new plan in a letter to President Obama that outlined $2.2 trillion in deficit reduction over the next 10 years, and a proposal to raise $800 billion in new revenue. The news failed to shift the general mood of the major indices in late trades.
The Dow Jones Industrial Average fell 60 points, or 0.46%, at 12,966, trimming the year's gain to 7%.
Breadth was negative with losers outpacing winners 22 to seven. The biggest percentage blue-chip decliners were DuPont (DD) , Coca-Cola (KO) , General Electric (GE) , Wal-Mart (WMT) and Chevron (CVX) .
Bank of America is putting off plans to revamp its lineup of bank accounts, and thereby increase monthly fees for some checking accounts, the Wall Street Journal reported. Shares fell 0.61%.
Boeing (BA) shares were down 0.35% as the aerospace giant and the Society of Professional Engineering Employees in Aerospace union, which represents the company's 23,000 engineers, tentatively agreed to resume labor talks on Tuesday, after their negotiations on a new contract ended abruptly last week.
Transportation, basic materials, conglomerates and utilities were among the weaker sector performers in the broad market. Consumer non-cyclicals, health care and technology were the only sectors in the green.
Decliners edged past advancers by a 1.5-to-1 ratio on the Big Board and a 1.2-to-1 ratio on the Nasdaq. Volumes hit 3.05 billion shares on the New York Stock Exchange and 1.65 billion shares on the Nasdaq.
"It's tempting to interpret the fall in the U.S. ISM manufacturing index ... as a temporary distortion due to superstorm Sandy. But the detail doesn't quite support this," said Paul Dales, senior U.S. economist at Capital Economics. "Although the new orders balance fell, to 50.3 from 54.2, the production index rose, to 53.7 from 52.4. If Sandy forced widespread shutdowns, then production would have fallen too. What's more, the ISM put little emphasis on Sandy in its written report, instead highlighting growing concerns over the fiscal cliff. The global economy can't be blamed either when the euro-zone and China PMIs are still rising. As such, the fiscal cliff may well be the culprit ... But if it is due to the cliff, a deal would trigger a bounce-back in the coming months."