Stocks slip as manufacturing index slides

By
Mortgage and Lending with Wallick & Volk Arizona's #1 Mortgage Lender NMLS #251674


Stocks were mostly lower this afternoon after a key manufacturing indicator was surprisingly weak, reflecting worries about Europe and China. But bargain-hunting tri

The Institute for Supply Management's June manufacturing index fell to 49.7% from May's 53.5%. A reading below 50% suggests the manufacturing economy is contracting, although economists say a reading of 47% is a true measure of slumping.

The big reason for the decline was a plunge in the new-orders component of the index from 60.1% to 47.8%, the first decline since April 2009. The decline was so big that a few economists considered it a fluke.

The ISM report offset a gain in construction spending but increased investor focus on Europe, where the eurozone countries reported a record region-wide unemployment rate of 11.1% in May, up from 11% in April. Spain's unemployment rate was the highest at 24.6%, with Greece at 21.9% in March. Austria had the lowest rate: 4.1%, followed by the Netherlands at 5.1%, Luxembourg at 5.4% and Germany at 5.6%.

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At 1:20 p.m. ET, the Dow Jones industrials ($INDU -0.28%) were off 41 points to 12,839; the blue chips had been down as many as 85 points. The Standard & Poor's 500 Index ($INX -0.01%) was down 2 points to 1,360, and the Nasdaq Composite Index ($COMPX +0.19%) was up 3 points to 2,938.

The Nasdaq-100 Index ($NDX +0.10%), which tracks the largest Nasdaq stocks, was up slightly at 2,616. Apple (AAPL +1.21%), the biggest influence on the index, was up $6.88 to $590.88.

The market's decline came after stocks shot up on Friday on hopes for a European banking union. The result of the big rally was the best month for the Dow since October and the best June for the Dow and S&P 500 since 1999 and the Nasdaq's best June since 2000.

The market closes early on Tuesday and will be closed on Wednesday for the July 4 holiday. Automakers will report June sales on Tuesday. Major retailers will report June sales on Thursday.

Friday brings the June jobs and unemployment report.

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