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Stocks end mixed on weak US economic reports
NEW YORK—Stocks zigged and zagged yesterday after reports that the US economy is weakening at a time when China and Europe are also slowing. The Dow Jones industrial average closed down 54.90 points at 13,035.94. Heavy equipment maker Caterpillar was the weakest stock in the Dow average, slipping three per cent, or US$2.67, to US$82.66. The Standard & Poor’s 500 index fell 1.64 points to 1,404.94.
The Nasdaq index bucked the losing trend, gaining 8.10 points at 3,075.06. A big reason was that the index’s biggest stock, Apple, rose US$9.73 to US$674.97 after the company invited reporters to a news event next week at which it is expected to announce the long-awaited iPhone 5. The market got off to a weak start after the Commerce Department reported that US construction spending fell 0.9 per cent in July from June, driven lower by a sharp drop in spending on home improvement projects.
The decline, the worst in a year, followed three months of gains powered by increases in home and apartment construction. New home construction rose again in July, but spending on home renovation projects fell 5.5 per cent. A separate report delivered more gloomy news on the economy: the third straight month of contraction in US manufacturing. New orders, production and employment all fell in August. Factories have been a key source of jobs and growth since the recession ended in June 2009, but the sector has been weak in recent months.
The Institute for Supply Management, a trade group of purchasing managers for manufacturers, said its index of manufacturing edged down to 49.6 from 49.7 in July. It was the lowest reading in three years. A reading below 50 indicates that manufacturing is contracting.
The week will culminate with US nonfarm payroll figures Friday, one of the most important barometers for the world’s largest economy. Federal Reserve chairman Ben Bernanke has indicated that the central bank is inclined to provide new stimulus if it’s needed.
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