The ISM manufacturing survey shows unexpected March decline
By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) — U.S. stocks lost ground on Monday, with two benchmark indexes retreating from record highs, after a closely watched manufacturing gauge unexpectedly fell in March.
The Institute for Supply Management’s factory index fell to 51.3% in March from 54.2% the month earlier. Economists polled by MarketWatch had forecast the ISM to match February’s level of 54.2%. Any figure over 50% signals expansion.
Separately, Markit’s reading of U.S. manufacturing in March came in at 54.6%, less than the 55% level analysts had expected.
Another report had construction spending climbing in February.
“The ISM number is a little bit of a disappointment. Construction is still good. Don’t fight the Fed on the construction front: they want to prop up the builder, and that part of the economy,” said Nick Raich, chief executive officer at the Earnings Scout.
“Right now it seems people are waiting more for employment numbers and earnings season,” he added. The Labor Department will release its March report on nonfarm payrolls and the unemployment rate on Friday.
The Dow Jones Industrial Average DJIA -0.18% dropped 37.29 points, or 0.3%, to 14,541.25, with 19 of its 30 components in the red, led by Intel Corp. INTC -1.88% , down 2%, and aluminum producer Alcoa Inc. AA -2.01% , off 1.9%.
The S&P 500 index SPX -0.50% fell 8.47 points, or 0.5%, to 1,560.72, with mining-equipment maker Joy Global Inc. JOY -3.43% declining 3% as industrial and materials were hardest hit among its 10 major sectors.
The Nasdaq Composite COMP -0.69% lost 24.36 points, or 0.7%, to 3,243.14.
Decliners outpaced advancers roughly 3-to-1 on the New York Stock Exchange, where 180 million shares traded as of 11:30 a.m. Eastern.
Composite volume surpassed 973 million.
The Chicago Board Options Exchange Volatility Index VIX +8.82% , which gauges the price of employing options as a hedge against losses in the S&P 500, leapt more than 10% to 14.03.
European stocks were closed for an extended Easter break, while Asian markets fell after data from Japan and China left some underwhelmed.
Wall Street and most global markets were closed on Friday ahead of the Easter weekend.
Both the S&P 500 and the Dow industrial finished are record highs on Thursday. The quarter was also one for the bulls, with the S&P 500 rising 10%, the best performance in a year.
Monday, EBay Inc. EBAY +3.56% climbed 3.6% after Canaccord Genuity Corp. upgraded shares of the online auctioneer to a buy rating and J.P. Morgan raised its price target to $64.
General Mills Inc. GIS -1.46% declined 1.2% after Morgan Stanley downgraded the food manufacturer to equal weight from uoverweight.
In a piece for the New York Times on Sunday, David Stockman, ex-budget director for President Ronald Reagan, said a market crash is just a few years away. The piece drew its share of detractors, including Princeton University economist and New York Times columnist Paul Krugman.
Kate Gibson is a reporter for MarketWatch, based in New York.
