Stocks Close Mostly Lower After Seeing Early
- U.S. Commentary
The major averages moved roughly sideways going into the close, lingering below the unchanged line. The Dow dipped 59.98 points or 0.5 percent to 12,965.60, the Nasdaq edged down 8.04 points or 0.3 percent to 3,002.20 and the S&P 500 fell 6.72 points or 0.5 percent to 1,409.46.
The initial strength on Wall Street came on the heels of positive manufacturing data out of China, with the data generating optimism about the outlook for the global economy.
A report from the China Federation of Logistics and Purchasing showed that its purchasing managers index rose to 50.6 in November from 50.2 in October, with a reading above 50 indicating growth in the Chinese manufacturing sector.
Buying interest waned not long after the open, however, as traders continued to express uncertainty about the looming U.S. fiscal cliff.
Traders kept a close eye on developments in Washington, where lawmakers continue to struggle to reach an agreement to avoid the automatic tax increases and spending cuts currently due to go into effect at the end of the year.
The subsequent pullback by the markets came following the release of a report from the Institute for Supply Management showing an unexpected contraction in U.S. manufacturing activity in the month of November.
The ISM said its purchasing managers index fell to 49.5 in November from 51.7 in October, with a reading below 50 indicating a contraction in manufacturing activity. The drop pulled the index down to its lowest level in over three years.
Meanwhile, a separate report from the Commerce Department showing a bigger than expected increase in U.S. construction spending in October helped to limit the downside for the markets.
Gold stocks saw considerable weakness on the day, resulting in a 2.3 percent drop by the NYSE Arca Gold Bugs Index. Gold Fields (GFI) helped to lead the sector lower, falling by 4.9 percent.
Significant weakness also emerged among chemical stocks, as reflected by the 1.9 percent loss posted by the Dow Jones Chemicals Index. Dow Chemical (DOW), FMC Corp. (FMC), and PPG Industries (PPG) posted notable losses.
Transportation stocks also came under pressure on the day, dragging the Dow Jones Transportation Average down by 1.1 percent. Most of the other major sectors also moved to the downside.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. While Japan's Nikkei 225 Index edged up by 0.1 percent and Australia's All Ordinaries Index rose by 0.5 percent, Hong Kong's Hang Seng Index tumbled by 1.2 percent.
Meanwhile, the major European markets all ended the day on the upside. The U.K.'s FTSE 100 Index edged up by 0.1 percent, while the French CAC 40 Index and the German DAX Index rose by 0.3 percent and 0.4 percent, respectively.
In the bond market, treasuries ended the day modestly lower but well off their worst levels. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, closed up by 2.2 basis points at 1.628 percent after reaching a high of 1.656 percent.
Amid a lack of major U.S. economic data, trading on Tuesday could be impacted by any developments regarding the fiscal cliff negotiations in Washington.
by RTT Staff Writer