Stocks edge lower after weak manufacturing report
A surprisingly weak manufacturing report sent stocks lower Monday. December is historically the best month for stocks.
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The Dow Jones industrial average fell 59.98 points, or 0.5 percent, to close at 12,965.60. The Standard and Poor's 500 dropped 6.72 points to 1,409.46. The Nasdaq composite was down 8.04 points to 3,002.20
U.S. manufacturing declined in November to its weakest level since July 2009, the Institute for Supply Management reported. The ISM's index fell to 49.5 from 51.7 a month earlier, below the 51.2 reading forecast by analysts. Any number below 50 on the scale means that manufacturing is contracting. Businesses expressed concerns about the "fiscal cliff," a series of sharp government spending cuts and tax increases scheduled to start Jan. 1 unless an agreement is reached to cut the budget deficit.
"The ISM numbers probably took a little air out of what was some hope for better news on where the economy is going," said Jim Dunigan, executive vice president at PNC Wealth Management in Philadelphia. "We're still in the camp that this gets resolved and we don't go over the cliff, but there's a lot of angst between now and then."
The White House and Congress are still seeking to hammer out a budget deal that will avoid the "cliff." Republicans, led by House Speaker John Boehner, have balked at President Barack Obama's opening proposal of $1.6 trillion in higher taxes over a decade, a possible extension of the temporary Social Security payroll tax cut and heightened presidential power to raise the national debt limit.
House Republicans on Monday proposed their own 10-year blueprint to President Barack Obama that calls for increasing the eligibility age for Medicare and lowering cost-of-living hikes for Social Security benefits.
"There's a sense of insecurity until the President and Boehner get their act together," said Ben Schwarz, chief market strategist at New York-based brokerage Lightspeed Financial. "If they put together a package in short order, if they do it in the next couple of weeks, you'll see a strong rally."