US stocks struggled to extend the previous week’s gains, dropping on Monday as disappointing US factory numbers dampened optimism about China’s economic growth.
The declines broke a three-day streak of gains for the S&P 500, keeping it shy of its 50-day moving average of about 1,420, a level that the index has been below since 22 October, and now serving as a key resistance point for investors. Manufacturing activity in the United States surprisingly contracted in November, the Institute for Supply Management said, dropping to its lowest level in more than three years.
Economic data has been mixed in recent months, fanning worries about the pace of growth at a time when investors are already concerned about the “fiscal cliff”.
The ISM number “was below expectations that were already conservative, and that puts an exclamation point on the concern many of us have about the cliff's impact on the economy,” said Leo Grohowski, of BNY Mellon Wealth Management in New York.
Markets had opened higher as output by China’s factories grew in November for the first time in more than a year, data showed. Investors look to strength from China, the world’s second-largest economy, to offset weak growth in the United States and Europe.
The Dow Jones industrial average fell 59.98 points, or 0.46 per cent, to 12,965.60. The Standard & Poor’s 500 Index declined 6.72 points, or 0.47 per cent, to 1,409.46. The Nasdaq Composite Index dropped 8.04 points, or 0.27 per cent, to 3,002.20.