All’s quiet on the western front…
AP: Wall Street started November with a cautious advance Monday, as investors largely overlooked a weak reading on the manufacturing sector in quiet trading ahead of the U.S. presidential election.
Stocks fluctuated briefly after the Institute for Supply Management reported that its measure of U.S. manufacturing activity fell last month to its lowest level in 26 years as credit conditions tightened and disruptions remained from Hurricane Ike. The trade group reported that its index of manufacturing activity fell to 38.9 in October from 43.5 in September. It was the weakest reading since September 1982, when the country was in a recession, and well below the 41.5 economists predicted, according to Thomson/IFR.
A separate report showed construction spending fell by a smaller-than-expected amount in September as a rebound in nonresidential activity helped offset further weakness in home building. The Commerce Department said construction spending fell by 0.3 per cent in September, less than the 0.8 per cent decline many economists expected.
Analysts are also anticipating weak vehicle sales figures from the auto industry for October — even more anemic than in September, when automakers said fewer than 1 million vehicles were sold for the first time in 15 years.
The data, particularly on manufacturing, support the growing belief that the economy is in recession, hurt by a drop in lending and slower overall spending. But with the Dow Jones industrial average having tumbled more than 14 per cent in October — its worst month in 21 years — the market priced in a significant falloff in economic activity. Wall Street must now determine whether the selloff in stocks is adequate, not enough or overdone.
…In midday trading, the Dow Jones industrial average rose 54.08, or 0.58 per cent, to 9,379.09 after rising 86 and falling 41.
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