Stocks fell on Tuesday after a disappointing report on U.S. manufacturing activity fit into a pattern of deteriorating global economic conditions.
The Dow Jones industrial average closed at 13,035.94, down 54.90 points or 0.4 per cent. The broader S&P 500 closed at 1404.94, down 1.64 points or 0.1 per cent. In Canada, the S&P/TSX composite index closed at 11,941.70, down 7.56 points or less than 0.1 per cent.
The ISM manufacturing index for August declined to 49.6, down from 49.8 in July. It also marked the third straight reading below 50, which marks the threshold between expansion and contraction. Economists had been expecting a reading of 50 in August.
While economists remarked that the disappointment in manufacturing activity raised the chances the Federal Reserve will respond with economic stimulus, the stock market reflected little optimism that central bank tinkering will help.
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.
Among U.S. homebuilders, D.R. Horton Inc. rose 2.6 per cent and Lennar Corp. rose 1.3 per cent.
Apple Inc. rose 1.5 per cent after it announced a media event on Sept. 12 – which is widely seen as a launch date for a new iPhone.
Valeant Pharmaceuticals International Inc. rose 14.8 per cent after it agreed to buy Medicis Pharmaceutical Corp. in a $2.6-billion (U.S.) deal.
Netflix Inc. fell 6.4 per cent after Amazon.com Inc. announced a licensing deal with cable channel Epix, giving Amazon’s movie-streaming customers access to more titles. Before it expired last month, Epix had a similar agreement with Netflix. Amazon shares fell 0.2 per cent.
Commodities were mixed. Crude oil fell to $95.30 a barrel, down $1.17. Gold rose to $1,696 an ounce, up $8.40. Among Canadian commodity producers, Barrick Gold Corp. fell 0.9 per cent and Suncor Energy Inc. rose 1 per cent.