By Dan Strumpf
Stocks retreated Monday as manufacturing data overseas raised
fresh fears of slowing economic growth, while a disappointing Black
Friday sales weekend weighed on U.S. retailers.
Meanwhile, oil-related stocks continued their recent slide, even
as crude prices staged a rebound.
The Dow Jones Industrial Average fell 39 points, or 0.2%, to
17789 in midmorning trading. The S&P 500 index fell 13 points,
or 0.7%, to 2054. The Nasdaq Composite Index shed 57 points, or
1.2%, to 4735.
The slide in U.S. stocks comes on the heels of losses in markets
globally. European stocks extended earlier losses as trading in the
U.S. got under way, with the Stoxx Europe 600 index recently
declining 0.6%.
Stocks were weighed Monday by signs of deepening trouble for the
manufacturing sector in major economies overseas. Two factory
readings in China showed only modest expansion for November, while
similar readings for Germany, France and Italy indicated
contraction.
The weak readings spurred declines among industrial stocks in
the U.S., even as a similar reading from the Institute of Supply
Management indicated more robust expansion domestically. Shares of
General Electric Corp. posted the biggest loss among Dow
components, shedding 2.2%.
Retail stocks also posted sharp losses following disappointing
Black Friday sales. Retail spending over the Thanksgiving weekend
fell 11%, according to the main industry trade group, a sign that
early deals are losing their allure.
The weak turnout came as a surprise to many investors, who had
been betting that an improving economy and falling gasoline prices
would pad retailer profits during the holiday shopping season.
"It just doesn't add up," said Jim Paulsen, chief investment
strategist at Wells Capital Management. "I look at the conditions
surrounding the consumer and I would argue it's the best I've seen
it in this recovery."
Shares of Dow-component Wal-Mart Stores Inc. declined 1.5%.
Target Corp. shares retreated 2.2%.
Elsewhere, selling in energy shares continued Monday. Energy
shares in the S&P 500 declined another 0.6%. The sector is off
19% in the last three months, amid a five-month selloff in oil
prices. The slide has raised fears of dwindling profits at oil
companies, particularly at the many U.S. producers and service
firms that proliferated in recent years when oil prices were $100 a
barrel or more.
Benchmark U.S. oil prices on the Nymex recently gained 1.5% to
$67.19 a barrel.
"The energy sector is going to be the most watched in the
S&P," said Michael Antonelli, equity sales trader at brokerage
firm Robert W. Baird. "It's a situation where a really rapid,
unexpected move occurs and everybody starts to question their
positions and wonder how much pain they can take in energy
stocks."
Gold prices rose 1.8%, to $1196.80 an ounce, reversing an
earlier loss after Swiss voters rejected a proposal to increase the
central bank's gold holdings. The yield on the 10-year Treasury
note rose to 2.172% as prices fell.
The Russian ruble--closely linked to oil because energy accounts
for a big portion of the country's exports--slumped to a fresh
record low of 52.67 to the dollar, nearly 5% weaker on the day.
Later in the week, investors will shift their focus to
Thursday's European Central Bank meeting, with expectations rising
that officials with signal intentions to expand their
asset-purchase program in a bid to jump-start the region's flagging
economy.
On Friday, the Labor Department will release its monthly jobs
report for November. Employers are expected to have added 228,000
jobs last month, with the unemployment rate seen coming in at
5.8%.
A downgrade of Japan's credit rating by Moody's Investors
Service briefly dented the performance of the yen, which quickly
rebounded from a seven-year low against the dollar to rise 0.2%.
The Nikkei stock index had closed for the day before the
announcement, closing 0.8% higher at a seven-year high.
Tommy Stubbington contributed to this article.
Write to Dan Strumpf at daniel.strumpf@wsj.com
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