By Dan Strumpf
Stocks retreated Monday as manufacturing data overseas raised
fresh fears of slowing economic growth, while a disappointing Black
Friday weekend weighed on U.S. retailers.
Meanwhile, shares of many oil-related stocks continued to fall,
even as crude prices staged a rebound.
The Dow Jones Industrial Average fell 22 points, or 0.1%, to
17807 early afternoon. The S&P 500 index fell 10 points, or
0.5%, to 2057. The Nasdaq Composite Index shed 49 points, or 1%, to
4742.
The slide in U.S. stocks comes on the heels of losses in markets
globally. European stocks extended earlier losses, with the Stoxx
Europe 600 index recently declining 0.5%.
Stocks globally 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 for Supply
Management indicated more robust expansion domestically. Shares of
General Electric Corp. posted the biggest loss among Dow
components, shedding 1.9%.
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 0.6%.
Target Corp. shares retreated 1.5%.
Apple Inc. fell 2.3% in volatile trading. Shares of the company,
the stock market's largest by market capitalization, fell as much
as 6.4% shortly after the open.
Elsewhere, the rout in oil producers continued despite a sharp
rebound in oil prices. U.S.-based oil producers were among the
biggest decliners in the sector, amid concerns that a sustained
drop in oil prices will weigh on their bottom lines. The S&P
Oil & Gas Exploration & Production exchange-traded fund
fell 3.1% in afternoon trade.
"People are finally starting to digest lower longer-term
projections for oil prices for some of the exploration and
production companies," said Eric Mustin, vice president of ETF
trading solutions at broker WallachBeth.
Large, integrated energy companies held up better. Many
investors expect bigger firms with more diverse assets such as
refining and pipelines to be cushioned from the blow of falling oil
prices. Shares of Exxon Mobil Corp., for example, rose 1.7%.
The 38% slide in oil prices since June has weighed heavily on
the sector, leaving many investors reluctant to call a bottom.
Morris Mark, president of Mark Asset Management, which manages more
than $500 million, said he sold out of all his energy investments
in the third quarter because of concerns over falling oil
prices.
"I think this thing hasn't shaken out yet," said Mr. Mark,
adding that oil prices need to stabilize before he feels
comfortable buying shares again. "I'm not inclined at this point to
indiscriminately short energy companies, but I'm not yet ready to
re-buy the good ones."
Benchmark U.S. oil prices on the Nymex recently gained 1.5% to
$67.19 a barrel.
Gold prices jumped 3.4% to $1214.50 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 2.202% 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 U.S. 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 up 0.8% at a seven-year high.
Write to Dan Strumpf at daniel.strumpf@wsj.com
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