Weak production sours market

Tuesday, December 4, 2012

— Stocks edged lower on Wall Street on 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 59.98 points to close at 12,965.60. The Standard and Poor’s 500 dropped 6.72 points to 1,409.46. The Nasdaq composite was down 8.04 points to 3,002.20.

Three stocks fell for every two that rose on the New York Stock Exchange. Consolidated volume was lighter than the recent average at 3 billion shares.

U.S. manufacturing declined in November to its weakest level since July 2009,the Institute for Supply Management reported.

“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 working to reach a budget deal that will avoid the “fiscal 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.

House Republicans on Monday proposed their own 10-year blueprint to Obama that calls for increasing the eligibility age for Medicare and lowering cost-of-living increases for Social Security benefits.

“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.”

The yield on the 10-year Treasury note rose 1 basis point to 1.62 percent.

Dell Inc. rose 42 cents, or 4.4 percent, to $10.06 after Goldman Sachs Group Inc. 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 as consumers migrated away from desktop PCs and laptops to portable devices such as tablets and phones.

Health Management Associates fell 45 cents, or 5.7 percent, to $7.50 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 the company pressured its emergency room doctors to admit patients.

Business, Pages 24 on 12/04/2012