Wall Street Wobbles Amid Global Economic Weakness

MarketsDow Jones Newswires

U.S. stocks edged lower Monday, pressured by further signs of economic weakness in Europe and Japan.

The Dow Jones Industrial Average slipped eight points, or 0.1%, to 17951 in morning trading. The S&P 500 index gave up one point to 2075. The Nasdaq Composite Index gained 11 points, or 0.2%, to 4791.

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The Dow was weighed down by declines in shares of McDonald's Corp., which posted sharper-than-expected sales declines in November. Shares of the fast-food operator fell 3.3%.

The losses come on the heels of declines in Europe, after data showed German industrial output rose less than expected in October and Japan's economy contracted 1.9% in the third quarter. The Stoxx Europe 600 Index declined 0.5%.

"It's Japan and Europe and the weakness there, especially with the Japanese numbers lighter than expected," said Tom Carter, managing director at brokerage JonesTrading. Trading activity was light, he said, and the strong gains for stocks in recent weeks means "any legitimate excuse will knock this market down."

Japan's economic contraction was previously estimated at 1.6% for the third quarter, and the downward revision underscores that the world's No. 3 economy is in a deeper recession than previously thought.

U.S. stocks, however, have been boosted by signs of steady economic expansion. Major benchmarks advanced to record highs Friday, propelling the Dow industrials and the S&P 500 to their seventh straight week of gains, spurred by a strong U.S. jobs report for November. The S&P 500 has gained 12% so far this year.

"The market is still digesting Friday's big day," said Doug Cote, chief market strategist at Voya Investment Management, referring to Friday's better-than-expected U.S. jobs report for November.

He added that stocks could turn higher by the end of the day, noting that "crude oil is continuing to come down, and I think that bodes well for the consumer." Crude-oil futures declined another 1.8% to $64.67 a barrel, weighed by a strengthening dollar.

Many investors, Mr. Cote included, still see further gains for stocks in the next year, buoyed by signs of economic improvement in the U.S. Many expect stocks to also remain buoyed by monetary easing efforts by central banks in Europe and Japan, even if the Federal Reserve tightens interest rates as expected next year.

Economic news is light this week, with many investors focused on the Fed's policy meeting that ends on Dec. 17 for indications on the pace of rate increases.

In China, exports in November grew by less than expected as economic woes in the Japanese and European economies sapped demand for Chinese goods. China's exports rose 4.7% in November from a year ago. A Wall Street Journal survey of economists showed a median growth forecast of 8%.

Gold futures rose 0.3% to $1193.70 an ounce. The yield on the 10-year Treasury note fell to 2.291% from 2.306% on Friday.

In corporate news, Merck & Co. agreed to buy Cubist Pharmaceuticals Inc. for $8.4 billion. Shares of Merck were little changed while those of Cubist surged 36%.

Shares of ConocoPhillips fell 3.1% after the oil company said it expects its capital spending to decline 20% to $13.5 billion next year from 2014 levels, reflecting lower spending on major projects and deferred spending elsewhere amid the slide in oil prices.

American Airlines Group Inc. shares declined 0.2% after the airline reduced its forecast for a key measure of revenue generation in the fourth quarter.