NEW YORK — Stocks edged lower on Wall Street Monday after a surprisingly weak manufacturing report heightened concern that fiscal deadlock in Washington is already hurting the economy.
The Dow Jones industrial average fell 50 points to 12,975 as of 1:37 p.m. Eastern. The Standard and Poor's 500 was down five points at 1,411. The Nasdaq composite was down six points to 3,004.
U.S. manufacturing declined in November, the Institute for Supply Management reported. The ISM's index fell to 49.5 from 51.7 a month earlier, below the 51.2 reading forecast by analysts. Any number below 50 on the scale means that manufacturing is contracting. Businesses expressed concerns about the “fiscal cliff,” a series of sharp government spending cuts and tax increases scheduled to start Jan. 1 unless an agreement is reached to cut the budget deficit.
“The ISM numbers probably took a little air out of what was some hope for better news on where the economy is going,” said Jim Dunigan, executive vice president at PNC Wealth Management in Philadelphia. “We're still in the camp that this gets resolved and we don't go over the cliff, but there's a lot of angst between now and then.”
The White House and Congress are still seeking to hammer out a budget deal that will avoid the “cliff.” Republicans, led by House Speaker John Boehner, have balked at President Barack Obama's opening proposal of $1.6 trillion in higher taxes over a decade, a possible extension of the temporary Social Security payroll tax cut and heightened presidential power to raise the national debt limit.
“There's a sense of insecurity until the President and Boehner get their act together,” said Ben Schwarz, chief market strategist at New York-based brokerage Lightspeed Financial. “If they put together a package in short order, if they do it in the next couple of weeks, you'll see a strong rally.”
Stocks have fluctuated since the Nov. 6 election as investors worried that a deal may not be reached in time to avoid the tax hikes and spending cuts. The S&P 500 is still about 1 percent below its closing level on the day that Americans went to the polls, having fallen as much as 5 percent in the weeks following the election.
Wall Street opened higher Monday following news that manufacturing activity in China, the world's second largest economy, grew for the first time in 13 months and after Greece announced details of a bond buyback program. The Dow had been up as much as 62 points shortly after the opening bell.
December is historically the best month for stocks. The S&P 500 has advanced an average of 1.95 percent over the past 30 years during the month of December, according to research from Schaeffer's Investment Research. The next best month is April, with an average return of 1.68 percent. The worst month is September, where investors lose an average of 0.72 percent.
The yield on the 10-year Treasury note rose 2 basis points to 1.63 percent.
Other stocks making big moves:
Dell rose 42 cents to $10.06 after Goldman Sachs raised its rating to “Buy” from “Sell.” Goldman cited Dell's healthy cash balance and said a recent decline in the stock may have been overdone. Dell has slumped this year on concern that consumers are migrating away from desktop PCs and laptops to portable devices such as tablets and phones.
Health Management Associates fell 37 cents to $7.59 after the CBS news program “60 Minutes” broadcast a segment critical of the company's patient admission policies. The program included interviews with former employees who said HMA pressured its emergency room doctors to admit patients.
Supervalu jumped 26 cents to $2.65 following a report that private equity firm Cerberus is considering multiple options for buying parts of the struggling grocery store chain.