NEW YORK - The three major stock indexes closed lower Monday, the first day of trading in December. Investors sold shares on signs that American shoppers are being tight with their cash this Christmas.
The Dow fell 77.64 points, or 0.5 percent, to 16,008.77. The Standard & Poor’s 500 index dropped 4.91 points, or 0.3 percent, to 1,800.90. The Nasdaq composite fell 14.63 points, or 0.4 percent, to 4,045.26.
Shoppers turned out in record numbers over the Thanksgiving weekend, but spent less than they did last year. It was the first decline in Thanksgiving weekend spending since a retail trade group began tracking it in 2006.
Investors reacted by selling all types of retailer stocks, from department stores to specialty chains. J.C. Penney, Macy’s and Target fell about 2 percent each. Urban Outfitters dropped nearly 4 percent.
“This holiday season is not going to be a gangbuster,” said Lindsey Piegza, chief economist of Sterne Agee. “Retailers are bracing for declining activity from now to the beginning of the year.”
One big exception to the retailer doldrums was Ebay, which saw its shares rise 1.5 percent thanks to strong sales at its online auctions.
The Dow Jones industrial average has surged 22 percent this year and, if history holds, will add to that gain this month. The Dow has risen in December in three out of every four years going back to 1950, according to the Stock Trader’s Almanac. The average gain: 1.7 percent.
The government reported that developers increased construction spending in October at the fastest pace in more than four years. A separate survey showed that manufacturing activity rose at its fastest pace in 2½ years.
Joseph S. Tanious, global market strategist at JPMorgan, said he was encouraged by the reports but that many investors ignored them. He said people have made too much money in the market already this year and are playing it safe by locking in gains.
“Investors are looking for reasons to sell,” Tanious said. “But I think the markets will move higher between here and the year-end.”
Stocks have soared as the economy maintains a slow but steady recovery and companies continue to increase earnings. Demand for stocks also has been bolstered by Federal Reserve purchases of $85 billion of bonds each month. The goal is to hold down interest rates, make bonds less attractive than stocks and stimulate the economy.
Stock investors are waiting for a government report on jobs Friday for clues about whether the stimulus policy is working and when the Fed will ease off its bond purchases. Investors have sold on days when they feared a Fed pullback was imminent.
Shares of 3M fell $5.83, or 4.4 percent, to $127.68 after Morgan Stanley downgraded the stock. It was the biggest loser in the Dow and the S&P 500.
Dow Chemical shares rose 92 cents, or 2.4 percent, to $39.98. The company plans to either sell or spin off about 40 manufacturing plants as it moves away from making cyclical commodities, products whose demand is closely tied to the ebbs and flows of the economy.
Information for this article was contributed by Steve Rothwell of The Associated Press.
Business, Pages 26 on 12/03/2013