Published July 02, 2012
FOX Business: The Power to Prosper
A report showing the U.S. manufacturing sector contracted for the first time since 2009 sent the blue-chip average falling into the red.
As of 3:00 p.m. ET, the Dow Jones Industrial Average fell 40 points, or 0.31%, to 12839, the S&P 500 dipped 0.59 point, or 0.04%, to 1362 and the Nasdaq Composite rose 5 points, or 0.17%, to 2940.
The Institute for Supply Management's manufacturing gauge fell to 49.7 in June from 53.5 in May, coming up short of the 52 expected. Readings below the 50 mark point to contraction while those above indicate expansion. It was the first reading below 50 since July 2009, according to ISM. The manufacturing sector had recently been a bright spot for the U.S. economy, but it has come under stress recently.
A separate report form the Commerce Department showed construction spending having risen 0.9% in May from April, beating expectations of a gain of 0.2%.
The markets also got manufacturing reports from China and Europe.
Chinese manufacturing accelerated at a slightly slower rate in June than the month before, according to the country's PMI gauge. That beat expectations of slight contraction. A private survey from HSBC pointed to a modest downturn for the month, but that also came in better than an earlier reading.
"As external demand has weakened and domestic demand hasn't shown a meaningful improvement in response to earlier easing measures, growth is likely to be on track for further slowdown," Hongbin Qu, HSBC's chief economist, China, wrote in a research note. "But as inflation eases sharply, Beijing has plenty of room and policy ammunition to avoid a hard landing."
The contraction in eurozone manufacturing continued at the same pace in June as the month before. Germany, the bloc's economic powerhouse, saw its manufacturing activity slip to the lowest level in three years, yet another sign that Europe's debt crisis is beginning to infect increasingly major economies.
A separate report showed unemployment in the eurozone having risen to a record of 11.1% in June from 11% in May.
On the corporate front, Barclays (BCS) Chairman Marcus Agius resigned amid a scandal over the bank's manipulation of Libor, which is a key interest rate banks use when lending to each other. The rate is also used at a peg of trillions of dollars in global financial transactions.
Micron Technology (MU) forged a deal to acquire rival Elpida Memory in a $2.5 billion deal.
Oil futures were to the downside after soaring in the last session. The benchmark contract traded in New York fell $1.21, or 1.4%, to $83.75 a barrel. Wholesale New York Harbor gasoline dipped 0.3% to $2.624 a gallon.
In metals, gold slid $6.50, or 0.41%, to $1,598 a troy ounce.
The Euro Stoxx 50 jumped 1.2% to 2292, the English FTSE 100 gained 1.3% to 5641 and the German DAX rallied 1.3% to 6496.
In Asia, the Japanese Nikkei 225 fell 0.04% to 9003 and the Chinese Hang Seng soared 2.2% to 19441.