Stocks Fall on Weak Economic Data
Wednesday November 1, 12:14 pm ET
By Ellen Simon, AP Business Writer
Stocks Are Lower on Weak Manufacturing, Housing Data
NEW YORK (AP) -- Stocks turned lower Wednesday after most of the day's economic data showed weakness, including a report that manufacturing growth in October was the slowest in more than three years.
The Institute for Supply Management, a private research group, reported weakness across the U.S. manufacturing sector. New orders, production and prices fell, while hiring was up. Treasurys rallied on the numbers and the dollar fell.
Data on the housing market also bolstered fears of an economic slowdown. Pending home sales for September, fell 1.1 percent, down 13.6 percent from a year earlier. September residential construction spending also fell 1.1 percent, the sixth month that construction spending dropped, the longest stretch of weakness in residential construction in more than a decade.
Before the manufacturing report's release, stocks were up on strong earnings from MasterCard Inc. and an upbeat forecast for private-sector jobs created in October.
That the indexes didn't fall harder is an indication "this market is in denial," said Rob Brown, chief investment officer of Genworth Financial Asset Management, an Encino, Calif.-based money manager with $4.7 billion under management. "It wants to focus on the positives and ignore the negatives."
In midday trading, the Dow Jones industrial average fell 24.17, or 0.20 percent, to 12,057.76.
Broader stock indicators were lower. The Standard & Poor's 500 index fell 3.40, or 0.25 percent, to 1,374.54, and the Nasdaq composite index fell 8.23, or 0.35 percent, to 2,358.48.
The difference between equity investors' sunny focus and bond investors' gloomy outlook widened. Bonds rose as debt investors bid up the possibility of a sharp economic downturn.
The yield on the 10-year Treasury fell to 4.57 percent, down from 4.61 percent late Tuesday. Bonds also rose sharply during Tuesday's session, with the yield on 10-year Treasuries falling from 4.67 to 4.61. The U.S. dollar was lower against other major currencies. Gold prices rose.
Crude oil futures were lower. A barrel of light crude was quoted at $58.15, down 58 cents in trading on the New York Mercantile Exchange.
Talks about a possible combination of pharmacy benefits manager Caremark Rx Inc. and drugstore chain CVS Corp. also roused traders from two lackluster sessions. A deal would likely be valued at more than $21 billion, Caremark's market value at the close of trading Tuesday.
Caremark and CVS said they were discussing a "merger of equals." Caremark rose $1.33, to $50.56 and CVS dropped $2.47 to $29.91.
Earnings news continued to be strong.
MasterCard Inc., owner of the nation's second-largest credit card brand, rose $11.98, or 16.17 percent, to $86.08 after its third-quarter profit climbed 82 percent. The company's earnings of $193 million, or $1.42 per share, beat analysts' estimates.
Time Warner Inc., the world's largest media conglomerate, was down 6 cents, at $19.95, after its third-quarter earnings excluding items fell shy of analysts' expectations. Earnings from discontinued operations and asset sales helped the company's results.
Marsh & McLennan Companies Inc., the nation's largest insurance brokerage, rose 83 cents to $30.27 after its profit more than doubled in the third quarter from a year earlier, helped by cost-cutting measures.
Advancing issues led decliners by 8 to 7 on the New York Stock Exchange, where volume was 726.8 million shares.
The Russell 2000 index of smaller companies was down 5.14, or 0.67 percent, to 761.70.
Overseas, Japan's Nikkei stock average fell 0.15 percent. In afternoon trading, Britain's FTSE 100 was up 0.33 percent, Germany's DAX index was up 0.37 percent, and France's CAC-40 was up 0.41 percent.
New York Stock Exchange: nyse.com
Nasdaq Stock Market: nasdaq.com
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