Dow lower on U.S. manufacturing data, auto sales in focus
U.S. equity markets were lower Monday after a gauge of U.S. manufacturing in November disappointed and as investors remained fixated on looming automatic spending cuts and tax hikes otherwise known as the fiscal cliff.
According to reports, House Republicans presented their first deficit-reduction plan Monday. Under the proposal, MarketWatch reported the Republicans would increase taxes by $800 billion, abour half of what Obama has proposed. The proposal also includes $600 billion in savings in Medicare and other health programs - more than the $400 billion Obama has proposed.
As at 2.45pm EDT, the Dow Jones Industrial Average was 0.31% lower at 12,985.61, the S&P 500 was 0.27% lower at 1,412.40 and the NASDAQ was 0.10% lower at 3,007.17.
HSBC’s Purchasing Managers’ Index for China rose to 50.5 in November from 49.5 in October – suggesting expansion. It was the first time in roughly a year that the index has risen above the 50 mark, anything lower indicates decline.
In Europe, manufacturing activity across the 17-nation eurozone fell for the sixteenth straight month in November, according to the final reading of the Markit purchasing managers' index.
In corporate news, U.S. auto sales in November were lifeted by a better economy and extra demand after Superstorm Sandy.
Ford's (NYSE:F) November sales rose 6.5 per cent to 177,673 vehicles. In a more positive sign for consumer demand, Ford's retail sales rose 12 per cent. GM's (NYSE:GM) sales rose 3 per cent to 186,505 cars and trucks, below what several analysts had expected. The company said the average price paid per vehicle rose $750 from last year.
Chrysler, majority owned by Fiat, said sales rose 14 per cent to 122,565 cars and trucks, its strongest result since 2007 before a recession pushed the U.S. automaker and GM into bankruptcy.
Research In Motion (NASDAQ:RIMM)(TSE:RIM) slipped after Canaccord Genuity analyst T. Michael Walkley downgraded the BlackBerry maker to "sell", citing fundamentals that do not support the stock price's recent move upward.
The Wall Street bank also increased its price target to $13 from $9, suggesting a 21% increase over the stock’s current higher price of $10.17.
Refinery operator PBF Energy Monday set a price range of $25 to $27 per share for its upcoming market debut. The company plans to issue 16.5 million shares, raising $429 million, based on the midpoint of its projected price range.
PBF Energy plans to trade on the New York Stock Exchange under the symbol PBF.
On the economic front, the ISM manufacturing index contracted in November, falling to its lowest level since July 2009.
Economists said the drop in manufacturing activity was driven by concerns about the onset of higher tax rates and government spending cuts, rather than disruptions due to Hurricane Sandy.
Separately, the Commerce Department reported construction spending rose 1.4% in October, above estimates for a 0.5% gain.
On the NYMEX, crude futures were up 37 cents, or 0.4%, to $89.28 a barrel while gold futures added $8.40, or 0.5%, to $1,721.10 an ounce.
European markets finished higher with the rising 0.40%, the CAC 40 gaining 0.26% and the FTSE 100 rising 0.08%.