Dow falls more than 200 points on weak manufacturing data, trade concerns

  • Written by MarketWatch
  • Published in Economics

The Dow fell more than 200 points Monday, on track for its biggest point and percentage drop since Oct. 18, after U.S. manufacturing data showed a continued contraction in November, putting all three major benchmark indexes on track for a second session of losses.

Investors also were monitoring trade concerns after President Donald Trump announced via Twitter[1] that the U.S. would restore tariffs on all steel and aluminum shipped into the U.S. from Brazil and Argentina.

What are major indexes doing?

The Dow Jones Industrial Average DJIA, -0.76%[2] fell 205 points, or 0.7%, to 27,847, while the S&P 500 index SPX, -0.74%[3] lost 22 points, or 0.7%, to 3,118. The Nasdaq Composite Index COMP, -1.09%[4] fell 90 points or 1%, to 8,574.

Stocks ended lower in an abbreviated session Friday following the Thanksgiving Day holiday, but posted solid November gains. The Dow fell 112.59 points on Friday, or 0.4%, to end at 28,051.41, leaving it with a 3.7% monthly gain. The S&P 500 declined 12.65 points, or 0.4%, to close at 3,140.98, booking a 3.4% monthly rise. The Nasdaq Composite lost 39.70 points, or 0.5%, to end at 8,665.47, notching a 4.5% monthly gain.

Read: Will a Santa Claus rally power the S&P 500 and Dow to their best years in a generation?[5]

What’s driving the market?

Stocks were pulled lower by a disappointing U.S. manufacturing survey data that pointed to a fourth straight month of contraction for the sector, with the Institute for Supply Management’s purchasing manager’s index unexpectedly falling to 48.1% in November[6] from 48.3% in October. Economists polled by MarketWatch expected a reading of 49.2%. Readings below 50% reflect business conditions worsening.

“The ISM report wasn’t encouraging, especially if you look at the new orders component,” said Shawn Cruz, manager of trader strategy at TD Ameritrade, in an interview. “Construction also came in on the downside. This puts pressure on the other data points due this week, like the jobs numbers on Friday. Consumer sentiment will be another important data point on Friday.”

The data overshadowed a separate survey on U.S. manufacturing released by Markit on Monday, which showed the sector gaining steam, with a 52.6 reading, versus October’s 52.2.

Andrew Hunter, senior U.S. economist at Capital Economics, cautioned that manufacturing still wasn’t “out of the woods” in a client note on Monday and warned that conditions underlying manufacturing “remain unusually weak.”

Adding to the jitters...

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