Stocks retreated Monday as manufacturing data overseas raised fresh fears of slowing economic growth, while a disappointing Black Friday sales weekend weighed on U.S. retailers.
Meanwhile, oil-related stocks continued their recent slide, even as crude prices staged a rebound.
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The Dow Jones Industrial Average fell 39 points, or 0.2%, to 17789 in midmorning trading. The S&P 500 index fell 13 points, or 0.7%, to 2054. The Nasdaq Composite Index shed 57 points, or 1.2%, to 4735.
The slide in U.S. stocks comes on the heels of losses in markets globally. European stocks extended earlier losses as trading in the U.S. got under way, with the Stoxx Europe 600 index recently declining 0.6%.
Stocks were weighed Monday by signs of deepening trouble for the manufacturing sector in major economies overseas. Two factory readings in China showed only modest expansion for November, while similar readings for Germany, France and Italy indicated contraction.
The weak readings spurred declines among industrial stocks in the U.S., even as a similar reading from the Institute of Supply Management indicated more robust expansion domestically. Shares of General Electric (NYSE:GE) posted the biggest loss among Dow components, shedding 2.2%.
Retail stocks also posted sharp losses following disappointing Black Friday sales. Retail spending over the Thanksgiving weekend fell 11%, according to the main industry trade group, a sign that early deals are losing their allure.
The weak turnout came as a surprise to many investors, who had been betting that an improving economy and falling gasoline prices would pad retailer profits during the holiday shopping season.
"It just doesn't add up," said Jim Paulsen, chief investment strategist at Wells Capital Management. "I look at the conditions surrounding the consumer and I would argue it's the best I've seen it in this recovery."
Shares of Dow-component Wal-Mart Stores (NYSE:WMT) declined 1.5%. Target (NYSE:TGT) shares retreated 2.2%.
Elsewhere, selling in energy shares continued Monday. Energy shares in the S&P 500 declined another 0.6%. The sector is off 19% in the last three months, amid a five-month selloff in oil prices. The slide has raised fears of dwindling profits at oil companies, particularly at the many U.S. producers and service firms that proliferated in recent years when oil prices were $100 a barrel or more.
Benchmark U.S. oil prices on the Nymex recently gained 1.5% to $67.19 a barrel.
"The energy sector is going to be the most watched in the S&P," said Michael Antonelli, equity sales trader at brokerage firm Robert W. Baird. "It's a situation where a really rapid, unexpected move occurs and everybody starts to question their positions and wonder how much pain they can take in energy stocks."
Gold prices rose 1.8%, to $1196.80 an ounce, reversing an earlier loss after Swiss voters rejected a proposal to increase the central bank's gold holdings. The yield on the 10-year Treasury note rose to 2.172% as prices fell.
The Russian ruble--closely linked to oil because energy accounts for a big portion of the country's exports--slumped to a fresh record low of 52.67 to the dollar, nearly 5% weaker on the day.
Later in the week, investors will shift their focus to Thursday's European Central Bank meeting, with expectations rising that officials with signal intentions to expand their asset-purchase program in a bid to jump-start the region's flagging economy.
On Friday, the Labor Department will release its monthly jobs report for November. Employers are expected to have added 228,000 jobs last month, with the unemployment rate seen coming in at 5.8%.
A downgrade of Japan's credit rating by Moody's Investors Service briefly dented the performance of the yen, which quickly rebounded from a seven-year low against the dollar to rise 0.2%. The Nikkei stock index had closed for the day before the announcement, closing 0.8% higher at a seven-year high.