North American stocks were down slightly in midday trading on Monday, marking the first setback since Federal Reserve stimulus policy last week drove major U.S. indexes to multi-year highs.
Shortly after noon, the Dow Jones industrial average was down 33 points or 0.2 per cent, to 13,561. The broader S&P 500 was down 3 points or 0.2 per cent, to 1463. In Canada, the S&P/TSX composite index was down 14 points or 0.1 per cent, to 12,485.
Stocks fell in Europe as well. The U.K.’s FTSE 100 fell 0.4 per cent and Germany’s DAX index fell 0.1 per cent.
European ministers were unable to agree on a timeline for building a more unified banking sector, which is seen as a next step in forming a better economic union among member states.
As well, the tensions between China and Japan over disputed islands now held by the Japanese are rising. There were reports of widespread demonstrations in China against the Japanese, and now Chinese fishing boats are apparently making their way to the islands, raising the chances of conflict between to two economic powerhouses.
In the United States, the focus shifted away from Fed attempts to boost economic activity to the activity itself: The Empire State manufacturing survey for the New York region contracted the most since April 2009, coming in worse than what economists had been expecting.
Within the S&P 500, cyclical stocks were the worst hit. Materials fell 0.9 per cent, financials fell 0.6 per cent and industrials fell 0.4 per cent. Economically defensive stocks tended to perform better: Telecom stocks rose 0.3 per cent and health care stocks rose 0.2 per cent.
In Canada, energy stocks rose 0.2 per cent as the price of crude oil rose to $99.32 (U.S.) a barrel, up 32 cents. However, financials fell 0.2 per cent and materials fell 0.5 per cent.
Rona Inc. slumped 8.4 per cent after Lowe’s Cos. Inc. withdrew its proposal to buy the Quebec-based home improvement retailer for $14.50 (Cdn) a share.