Stocks drop on ISM manufacturing malaise, trade uncertainty

Manufacturing and trade uncertainty spooks investors

Stocks kicked off the first trading day of December on a down note with the Dow Jones Industrial Average closing at a seven-week low after the latest read on U.S. manufacturing showed more weakness in the sector.

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The Dow shed over 268 points or nearly one percent, while the S&P 500 lost 0.86 percent and the Nasdaq Composite slipped 1.1. percent.

TickerSecurityLastChangeChange %
I:DJIDOW JONES AVERAGES27963.4-51.66-0.18%
SP500S&P 5003144.53-1.38-0.04%
I:COMPNASDAQ COMPOSITE INDEX8654.034206-2.49-0.03%

The ISM Manufacturing data slipped to a reading of 48.1 in November from 48.3 the month prior. A number below 50 signals contraction. After the closing bell, President Trump, in a tweet, blamed the Federal Reserve for supporting a stronger dollar, which in turn could be hurting manufacturing.

Investors also took in more mixed signals on U.S.-China trade talks after Commerce Secretary Wilbur Ross, in an exclusive interview with FOX Business, said President Trump won't hesitate to move forward with December tariffs if the two economic superpowers cannot reach a deal that is mutually acceptable. And USMCA remains in limbo, according to House Speaker Nancy Pelosi who said the Democrats are still reviewing the fine print.

The trio of headlines overrode what is a strong start to the holiday shopping season.

As for Cyber Monday, more records could be broken according to Adobe Analytics which estimates sales could hit $9.4 billion, a jump of 18.9 percent from the same period a year ago. This follows a solid Black Friday when shoppers spent a record-breaking $7.4 billion online, said Adobe Analytics, which measures transactions from 80 of the top 100 online retailers. Additionally, Small Business Saturday smashed records with $3.6 billion in online sales, according to data released Sunday.

TickerSecurityLastChangeChange %
AMZNAMAZON.COM INC.1,755.32+3.72+0.21%
WMTWALMART INC.119.60-0.18-0.15%
TGTTARGET CORP.127.00+1.97+1.58%
MMACY'S INC.15.46+0.31+2.05%
JWNNORDSTROM39.01+1.45+3.86%
BBYBEST BUY82.99+0.94+1.15%

While brick-and-mortar sales fell 6.2 percent on Black Friday, they were up 2.3 percent on Thanksgiving Day, according to ShopperTrack data.

Markets also received support from Chinese factory activity, which showed improvement ahead of the possible Dec. 15 U.S. tariff hike on Chinese imports.

Monthly surveys showed Chinese manufacturing output rose in November, defying expectations of a decline. Caixin magazine said its purchasing managers’ index rose to a two-year high of 51.8 from October’s 51.7. A reading above 50 shows the sector is expanding.

A separate survey by the China Federation for Logistics & Purchasing rose to 50.2 from 49.3.

In other trade news, President Trump announced he was restoring tariffs on all steel and aluminum shipped to the U.S. from Brazil and Argentina.

Steel stocks rose after the announcement.

TickerSecurityLastChangeChange %
XUNITED STATES STEEL CORPORATION14.35+0.41+2.91%
AKSAK STEEL HOLDING CORPORATION3.35+0.12+3.56%

Disney's "Frozen 2" raked in $132.7 million at the box office during the Wednesday through Sunday period, a record for Thanksgiving. The movie has earned $288 million at the domestic box office during the first 10 days of its release.Still, shares were under pressure along with the broader market.

Elsewhere, Roku shares were under pressure after receiving a downgrade to "underweight" at Morgan Stanley due to valuation concerns. The firm raised its price target to $110 a share, 32 percent below Friday's close.

Fiat Chrysler ended little changed despite confirmation that the United Auto Workers reached a tentative labor deal with the automaker.

TickerSecurityLastChangeChange %
DISWALT DISNEY COMPANY147.18-0.48-0.33%
ROKUROKU INC145.93+1.67+1.16%
FCAUFIAT CHRYSLER AUTOMOBILES N.V.14.54-0.09-0.62%

On the commodities front, Brent crude was up about 0.7 percent to almost $61 a barrel and West Texas Intermediate crude oil was modestly higher trading around the $56 per barrel level after OPEC and its allies hinted at cutting production at this week's meeting. Gold prices slipped.

Meanwhile, U.S. Treasurys were sharply lower with selling causing the yield on the 10-year note to climb by 5 basis points to 1.826 percent.

In Asia, China's Shanghai Composite rose less than 0.1 percent, Tokyo’s Nikkei gained 1 percent and Hong Kong’s Hang Seng added 0.4 percent.

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European markets were lower with France's CAC down 0.9 percent to pace the decline. Germany's DAX and Britain's FTSE were lower by 0.7 percent and 0.3 percent, respectively.

U.S. stocks closed out November with their largest monthly gains since June -- though slipped in Friday's shortened trading session as the holiday shopping season kicked off. The Dow Jones Industrial Average, S&P 500 and the Nasdaq Composite each rose more than 3 percent for the month and booked modest weekly gains.

FOX Business' Ken Martin and The Associated Press contributed to this report.