Wall Street flat after ISM, construction spending data

December 2, 2013

By Chuck Mikolajczak

NEW YORK (Reuters) – U.S. stocks were flat on Monday, in the wake of eight straight weeks of gains, after data indicated strengthening growth in manufacturing and construction spending increased.

The Institute for Supply Management (ISM) said its index of national factory activity rose to 57.3 in November – its best showing since April 2011 – from 56.4 the prior month, while the pace of hiring in the sector also accelerated.

In addition, construction spending increased 0.8 percent to an annual rate of $908.4 billion, the highest level since May 2009 as a rebound in public construction projects offset in drop in private outlays.

Earlier, financial data firm Markit said its final U.S. Manufacturing Purchasing Managers Index rose to 54.7, stronger than the preliminary reading October of 54.3.

“In general the economic numbers for the past month have been better than expected,” said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois. “That also means the Fed is moving closer to tapering.”

Equities have rallied in recent weeks on expectations for continued stimulus from the Federal Reserve. The S&P 500 has risen for eight straight weeks, its longest run since a nine-week climb between November 2003 and January 2004, putting the yearly gain at nearly 27 percent.

While the Fed’s stimulus program is expected to put a floor under equity prices for as long as it continues, market participants expect the central bank to begin scaling back its bond buying program within the next few months, with many expecting an announcement in March.

The central bank has said it would begin to slow the program when certain economic measures meet its targets. The calendar is packed this week with data that may provide some insight, culminating with the November payrolls report on Friday.

The Dow Jones industrial average fell 13.65 points or 0.08 percent, to 16,072.76, the S&P 500 gained 0.47 points or 0.03 percent, to 1,806.28 and the Nasdaq Composite added 1.066 points or 0.03 percent, to 4,060.952.

Dow Chemical identified the commodity chemicals businesses it would sell or spin off as part of a plan to sell assets worth $3 billion to $4 billion, representing up to $5 billion of total annual revenue. Dow shares rose 2.3 percent to $39.95.

Retailers will continue to be in focus as the holiday shopping season ramps up. Heavy discounting took a toll on U.S. retail sales during the Thanksgiving weekend as shoppers spent almost 3 percent less than they did a year earlier, according to an industry group.

The S&P retail sector fell 0.3 percent, led lower by a 2.5 percent drop in Urban Outfitters to $38.05 after the stock was cut to “neutral” by Sterne Agee.

(Reporting by Chuck Mikolajczak; Editing by Chizu Nomiyama and Nick Zieminski)

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