Stocks drop on weak ISM report
The Dow dips below 13,000 after a key manufacturing index declines. Ford, GM and Chrysler post sales gains. Europe is in focus ahead of an ECB meeting. Netflix sinks on an Amazon streaming deal.
Stocks fell Tuesday after U.S. manufacturing declined in August to its lowest level since July 2009. Also in focus are a European Central Bank meeting later this week and U.S. employment numbers. The Dow was hovering around 13,000 and the S&P near 1,400.
The Dow Jones Industrial Average ($INDU) was down 93 points at 12,998. The S&P 500 ($INX) was down 8 points at 1,399. The Nasdaq Composite ($COMPX) was down 19 points at 3,048.
US data in focus ahead of Fed meeting
U.S. August manufacturing PMI fell slightly to 49.6 from 49.8 in July, the Institute of Supply Management reported. Economists expected the index to tick up to 50 from 49.8, according to Briefing.com. A reading below 50 indicates a contraction in manufacturing activity, while a reading above 50 indicates expansion. It was the third straight month of contraction.
July construction spending declined by 0.9%, the Commerce Department said. Economists had forecast a rise of 0.5%, according to Briefing.com, after a rise of 0.4% in June.
Car manufacturers have been releasing their U.S. car and truck sales for August. Sales are expected to increase by 16% to 20% overall, to an annual rate of 14.2 million vehicles, as better financing deals and an improving housing market encourage consumers to replace aging cars and trucks, Reuters reports. July figures were disappointing.
More U.S. economic reports are due throughout the week, with nonfarm labor data released Friday. Those numbers will be watched carefully, as they are likely to affect the Federal Reserve's decision regarding more stimulus. The Fed's next policy meeting is next week. On Friday, stocks rallied after Fed Chairman Ben Bernanke said there's room for more stimulus.
Meanwhile, however, the ECB is taking center stage at its next meeting Thursday. It's been some time since markets have anticipated the ECB's announcement of a bond-buying plan to help lower borrowing costs of distressed nations. Investors, however, worry ECB President Mario Draghi will fail to outline details of the plan until a better indication comes out of Germany.
Draghi did say late Monday the ECB could buy bonds with maturities of up to three years without violating its charter, fueling a massive rally by short-dated Spanish and Italian government debt on Tuesday, MarketWatch reported.
European stocks slipped ahead of the meeting after Moody's Investors Service warned that the European Union could lose its Aaa debt rating. Also affecting markets, the Swiss economy unexpectedly shrank in the second quarter, Reuters reports.
Asian markets declined Tuesday as well after Moody's downgraded its outlook on the European Union. It didn't help that China's official purchasing managers index fell below 50 for the first time since November 2011.
Stocks to watch
Campbell Soup (CPB) posted better-than-expected earnings, helped by higher soup sales. The company also gave an upbeat full-year outlook.
Smithfield Foods (SFD) reported 25% lower earnings of 40 cents per share, coming in below analyst expectations. The company cited growth in its packaged-meat business but poor performance of its fresh pork business dragged on profits, according to MarketWatch.
Ford Motor (F) said U.S. sales in August rose by 13% from the same month a year ago, led by improved sales of the Focus and Fusion models. That was well above estimates of 7% to 10% sales growth. Ford sold 197,249 vehicles during the month, compared with 175,220 in August 2011.
Chrysler reported its 29th consecutive month of year-on-year sales gains, with a 14% rise in August, above estimates.
General Motors (GM) said U.S. sales rose 10% in August as Buick, Chevrolet and Cadillac showed solid improvement. GM was expected to post 2% to 6% growth in vehicle sales. Total sales were 240,520 vehicles, up from 218,479 in August 2011.
Shares of online video provider Netflix (NFLX) sank 10% after Amazon.com (AMZN) said it signed a multiyear licensing deal in the U.S. with Viacom's (VIA) Epix premium cable network to bring superhero blockbuster movies and thousands of other titles to Amazon's streaming video service. Just days ago, Netflix's exclusive deal with Epix expired.
Canada's biggest public drugmaker, Valeant Pharmaceuticals (VRX), will buy Medicis Pharamaceutical (MRX) for $2.6 billion in cash, its latest skin care deal in the U.S. this year. Medicis sells Dysport, an injection similar to Allergan's (AGN) Botox.
And the dems keep on insisting that you are better than you were 4 years ago..................and for the 150,000 new government employees hired at an average salary of $70,000 plus all the perks..........THEY CERTAINTELY ARE BETTER OFF!!!
For the rest of us......... we have lost income, the dollar has lost 20% of it's value and the real unemployment rate is 15-16%
I agree with Clint Eastwood.............we have to let him go !!!!
Campbell Soup better-than-expected earnings, helped by higher soup sales.
THIS IS BECAUSE THAT'S ALL WE CAN AFFORD AFTER PAYING THE GAS PRICES THAT WE ARE PAYING NOW.
Well, well, well, the summer is over, I must have missed the "summer of recovery" during these last 4 years?
You know, those 500,000 jobs per MONTH, that were suddenly going to appear during this "summer of recovery"
Ring any bells, commies?
4 summers and ZERO recoveries !
LESS jobs today than the day Dear Leader took office !
Yes, how interesting , NOW, he needs 4 more summers to do the job, BUT he didn't say that back in 2008, did he?
Instead he PROMISED by the END of his "first" term (Puke) to
a) cut the deficit in half !
b) unemployment to the 5-6% level !
What did we get?
tripled the deficit
44 months in a row of + 8% unemployment !
Well, he did give millions of illegal's amnesty
AREN'T WE LUCKY ?
The market is collapsing even with the promise of free monies from Bernanke and the European and Japanese central bankers.
Yep the end is upon us folks.
interesting article this weekend in the LA Times about how the hispanic illegal's are actually "republican" in nature but voting democrat to help all their non-voting friends.
the net result is BOTH parties want these illegal anchor baby votes. the numbers are certainly enough to swing the swing states.
more concern over illegal's than anyone who is here as a regular citizen
Wouldn't it be interesting if we could get more Independents into Congress, rather that this partisan bullcrap that we've been dealing with for the past 4 years?
Looking to the Fed to try and save the day. This is what we have become. A bunch of shameless addicts.
You want "real" talk
uh like :
Hope & change
Change you can believe in ?
Cut the deficit in HALF?
No PORK in my bills ?
THAT's what YOU voted for in 08.
RING ANY BELLS, here?
Do tell , what WAS /IS Obuma's "plan" , I must have forgot?
He couldn't even PASS A BUDGET IN 4 YEARS !!
Are you for real?
no doubt people are learning to get more miles out of their existing cars.
also, note restaurants aren't really back to their old crowds yet.....
>>>>>>14.2 million new cars sold per year is a long way from the 16.5 million we were at a few years. These numbers always seemed really high. But I guess gov at all levels is a huge buyer of new cars, along with big rental-car companies. Wonder how many new cars Hertz or Enterprise buy every year? - gotta be a bunch. <<<<<<
Tubleweed_ I don't believe, i should be taxed to pay for 25 million illegal aliens healthcare, food stamps, 42 in tv's and cell phones. I don't believe I should be paying to house the 60 percent of illegal aiens/invaders that occupy the US prison system.
Meanwhile, Grandma whitey is getting her medicaid benefits cut.
Nature has it's way of taking care of the weak-----go get another job and doante that money---I don't want to pay anymore. Obama is going to be able to write the sequel to "tales of my father",soon. It will be called tail between my leg.
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