Saturday, May 26, 2018
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Stock Market

Stocks droop on Wall Street

Weakness in manufacturing and construction reported

NEW YORK — Stocks are falling on Wall Street following reports that construction spending and manufacturing have weakened in the U.S.

The Dow Jones industrial average was down 80 points at 13,010 just after 1 p.m. today. The broader S&P 500 index fell six points to 1,4006 and the Nasdaq composite fell 10 points to 3,056. The U.S. stock market was closed Monday for Labor Day.

Industrial and materials stocks fell the most. Heavy equipment maker Caterpillar was the weakest stock in the Dow average, slipping 3 percent, or $2.58, to $82.75.

The Commerce Department reported that U.S. construction spending fell 0.9 percent in July from June, driven lower by a sharp drop on 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 percent.

The report sent stocks of home improvement stores lower. Home Depot fell 11 cents to $56.66 and Lowe’s was off 21 cents to $28.34.

A separate report delivered more gloomy news on the economy: the third straight month of contraction in U.S. 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 been weak in recent months.

The Institute for Supply Management, a trade group of purchasing managers, says its index of manufacturing edged down to 49.6 from 49.7 in July, and the lowest reading in three years. A reading below 50 indicates that manufacturing is contracting.

“It’s time to go back to school and sharpen up on stocks and pay attention to the numbers,” said Kim Forrest, equity analyst at Fort Pitt Capital Group. “The numbers show that there’s a lot of weakness out there and investors have gotten lulled into complacency in the last month or so.”

The week will culminate with U.S. nonfarm payroll figures Friday, one of the most important barometers for the world’s biggest economy. Federal Reserve chairman Ben Bernanke has indicated that the central bank is inclined to provide new stimulus if it’s needed.

In Europe, Moody’s warned that it could downgrade the credit rating of the European Union as a whole, citing the continent’s lingering debt crisis. That sent markets broadly lower in Europe. Benchmark indexes fell 1.2 percent in Germany, 1.6 percent in France and 1.5 percent in Britain.

The focus this week will be on the European Central Bank President Mario Draghi, who is expected to announce details on Thursday of a new bond-buying program intended to bring down the borrowing costs of countries such as Spain and Italy.

The price of oil also slipped on worries that demand for oil would fall. U.S. benchmark crude fell $1.06 to $95.41 in morning trading in New York.

Among other stocks making big moves:

— Netflix plunged $4.70 to $55, a loss of 8 percent. Rival Amazon signed a deal with a company that licenses movies from Paramount, MGM and Lionsgate for its online streaming service.

— Consol Energy fell 5 percent after the company said it will temporarily idle a mine because of weak steel demand. The stock fell $1.38 to $28.82.

— Medicis Pharmaceutical Corp. soared 38 percent after a deal that it will be acquired by dermatology products maker Valeant Pharmaceuticals International. Medicis was up $11.98 at $43.54.

— Aluminum producer Alcoa was off 13 cents to $8.43, Alpha Natural Resources fell 40 cents, or 7 percent, at $5.54 and Peabody Energy was down 79 cents, or 4 percent, to $20.84.

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