North American stocks were down in midday trading on Tuesday, weighed down by a disappointing report on U.S. manufacturing activity.
Shortly after noon, the Dow Jones industrial average was down 94 points or 0.7 per cent, to 12,997. The broader S&P 500 was down 7 points or 0.5 per cent, to 1399. In Canada, the S&P/TSX composite index was down 38 points or 0.3 per cent, to 11,911.
The declines follow August’s reading for the ISM manufacturing index: It declined to 49.6, down from 49.8 in July and marking the third straight reading below 50, which marks the threshold between expansion and contraction.
While economists remarked that the disappointment raised the chances the Federal Reserve will respond with economic stimulus, the stock market reflected little optimism. The market slump occurred after the report was released.
As well, U.S. factory orders fell 0.9 per cent in July over the previous month, versus expectations for a gain of 0.4 per cent.
The reports overshadowed an upbeat look at U.S. home prices. According to CoreLogic, prices rose 3.8 per cent in July over last year, marking the biggest year-over-year increase in six years. Prices also rose 1.3 per cent over June.
Within the S&P 500, materials fell 1.6 per cent, industrials fell 1.3 per cent, energy stocks fell 1.2 per cent and technology stocks fell 0.8 per cent.
Within Canada’s benchmark index, energy stocks fell 0.8 per cent, industrials fell 0.5 per cent, financials fell 0.4 per cent and materials fell 0.3 per cent.
Valeant Pharmaceuticals International Inc. rose 15.3 per cent after it agreed to buy Medicis Pharmaceutical Corp. in a $2.6-billion (U.S.) deal.
In Europe, the U.K.’s FTSE 100 fell 1.5 per cent and Germany’s DAX index fell 1.2 per cent.