You are here
Stocks struggle in response to decreased manufacturing in US
NEW YORK—Investors rejoiced over Europe last week. Yesterday, they got back to worrying about the United States. Stocks struggled to stay out of the red in quiet holiday-week trading after a trade group said American manufacturing shrank in June for the first time in almost three years. The Dow Jones industrial average was higher in early trading but fell after the manufacturing report came out at 10 am EDT and never recovered. It finished down 8.70 points at 12,871.39. The Standard & Poor’s 500 and the Nasdaq composite index both finished slightly higher after hopping between small gains and losses. The S&P rose 3.35 to 1,365.51. The Nasdaq rose 16.18 to 2,951.23. Chemical company DuPont fell the most in the Dow. It lost US$1.14, or 2.3 per cent, to US$49.43. Caterpillar, General Electric, Alcoa, Exxon Mobil, Boeing and other companies tied to manufacturing were also down.
It was a tepid performance compared with Europe’s. Stock indexes in France, Britain and Germany rose more than one per cent, still riding the euphoria from Friday’s announcement that European leaders will make it easier for banks to get bailout loans.
That news pushed the Dow up 277 points Friday. The government did report a sliver of good news about the US.economy yesterday, though investors seemed underwhelmed: Construction spending rose in May by 0.9 per cent, the most in five months. Yesterday was the first day of trading for the second half of the year. In the first half, the S&P gained more than eight per cent. Several financial analysts said they expected volatile markets, at least through the November presidential election. “We don’t know who it will be,” said Benjamin Segal, portfolio manager for global equities at Neuberger Berman. “And even if we did, we don’t know the particular policies they’d pursue.” Analysts also cited tax increases and spending cuts scheduled to take effect in January—the so-called fiscal cliff. Derrick Irwin, portfolio manager for Wells Fargo Advantage Funds, said the US market would “muddle through the foreseeable future.” Leo Grohowski, chief investment officer of Bank of New York Mellon’s wealth management division, said the market would “continue to move from hope to despair.”
Investors hope for some clarity later this week. US car companies report monthly sales today, retailers like Target and Macy’s report monthly sales on Thursday, and a closely watched report on US jobs comes out Friday. And though stocks rose in Europe, some analysts wondered how long those gains would last. Previous steps to ease the debt crisis have been met by market gains that quickly disappeared. “The eurozone is really uncharted territory for a generation of investors,” Irwin said. “I think anybody who thinks they really know what is happening there is, at best, guessing.” The day also brought reminders of how badly Europe needs help: Unemployment in the 17 countries that use the euro hit the highest level since the euro was launched in 1999. In France, auditors warned that the country still has a big budget hole to plug. In Cyprus, leaders prepared for talks on its own bailout. And in Germany, the highest court announced it would hear arguments from people who want to block the rescue. The yield on the benchmark ten-year US Treasury note fell to 1.59 per cent yesterday, down from 1.63 on Friday. The price of crude oil fell US$1.21 to end the day at US$83.75 per barrel. (AP)
User comments posted on this website are the sole views and opinions of the comment writer and are not representative of Guardian Media Limited or its staff. Guardian Media Limited accepts no liability and will not be held accountable for user comments.
Please help us keep out site clean from inappropriate comments by using the flag option.
Guardian Media Limited reserves the right to remove, to edit or to censor any comments. Any content which is considered unsuitable, unlawful or offensive, includes personal details, advertises or promotes products, services or websites or repeats previous comments will be removed.