Slowdown worries pummel stocks

Major gauges tumble after key manufacturing index comes in at lowest level since April 2003.

By Grace Wong, CNNMoney.com senior writer

NEW YORK (CNNMoney.com) -- The blue chip Dow Jones industrial average lost nearly 100 points Friday after a key manufacturing index came in below estimates, sparking more concerns about the health of the economy.

The Dow Jones industrial average (down 67.86 to 12,154.07, Charts) lost 0.7 percent more than an hour into the session.

The Standard & Poor's 500 (down 10.48 to 1,390.15, Charts) index also tumbled 0.7 percent and the Nasdaq (down 31.67 to 2,400.10, Charts) composite sank more than 1 percent.

The Institute for Supply Management said its index for nationwide manufacturing activity fell to 49.5 in November.

The measure, the lowest since April 2003, came in below 50 - which indicates contraction in manufacturing.

The soft reading comes on the heels of a weak report on manufacturing activity in the Midwest that raised more worries about the economic slowdown on Thursday.

A report on construction spending released Friday also fell more than expected.

The dollar fell and Treasury bonds climbed on the report as investors bet the Fed wouldn't have reason to raise rates anytime soon and could instead start easing rates.

Stocks have been volatile all week after suffering a steep selloff Monday, and there are few signs helping to improve sentiment.

Investors will also take in November sales results from automakers on Friday as well as a string of speeches from Fed officials.

Chairman Ben Bernanke kicked off the comments with a short speech at a monetary policy conference in Washington, but he didn't offer any clues about the future course of interest rates.

Vice Chairman Donald Kohn is due to speak at the same conference Friday night. Richmond Federal Reserve President Jeffrey Lacker - a voting member of the Fed's policy committee - also speaks during the day. Another speech is due from Chicago Fed President Michael Moskow, who will be a voting member in 2007.

On the move

On the Dow, Home Depot (Charts) was one of the few gainers. Shares gained 2 percent on reports that buyout firm Kohlberg Kravis Roberts is interested in the retailer.

GM (Charts) shares were little changed even after billionaire investor Kirk Kerkorian walked away from his investment in the world's largest automaker.

Kerkorian sold his entire stake in GM (Charts) to Bank of America (Charts), according to a report by The Wall Street Journal. The first signs that Kerkorian was dumping his stock surfaced Thursday, so the news may have already been priced into the stock.

Elsewhere, accessories retailer Claire's Stores (Charts) climbed 5 percent after it said it hired Goldman Sachs to explore a potential sale of the company.

Market breadth was negative. On the New York Stock Exchange, decliners beat advancers by a margin of three to two on volume of 587 million shares. On the Nasdaq, losers topped winners also by a margin of three to two on volume of 587 million shares.

Oil prices fell after hitting a two-month high above $63 Thursday. U.S. crude light crude oil for January delivery tumbled 75 cents to $62.38 a barrel on the New York Mercantile Exchange.

The dollar kept sliding against the euro, hovering around a 20-month low versus the euro zone currency. The greenback also weakened against the Japanese yen.

Treasury prices surged, lowering the yield on the benchmark 10-year note to 4.40 percent, down from 4.47 Thursday. Bond prices and yields move in opposite directions.

Stocks in Asia closed higher. Stocks in Europe also rose in early trading.

Gold prices fell $2.10 to $650.80 an ounce.


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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.