After briefly touching positive territory on Monday morning, U.S. equities took a sharp turn downward. Slower-than-expected manufacturing growth weighed on investor sentiment despite a healthy increase in construction outlays.
At 12:30 p.m.: DJIA: -0.16%, S&P 500: -0.50%, NASDAQ: -0.84%.
Here are three stories helping move the markets on Monday afternoon:
1) Government financial calamities dotted the first months of the year, and concerns that the fiscal cliff and the subsequent sequester would put the economy back in dire straits prompted many analysts and pundits to put forward a negative growth thesis. But so far, while the economic numbers have not been outstanding and gains have been uneven, slight improvements have been made in housing, labor, and manufacturing. Monday’s report on construction spending fits with that trend.
Coming in just above the consensus estimate for a 1 percent gain, the United States Department of Commerce’s Census Bureau reported that construction outlays rebounded 1.2 percent in February to an annualized rate of $885.1 billion after falling 2.1 percent in January… (Read more.)
2) Manufacturing continued to expand in March, albeit at a slower rate than in February, according to the March 2013 ISM Report On Business. The Institute for Supply Management reports the PMI registered 51.3 percent in March, a 2.9 point decline from February.
March’s PMI is disappointing to investors looking for an excuse to bid up the S&P 500. Economists were expecting manufacturing activity to edge just slightly downward from 54.2 in February to 54.0 in March. This makes the 2.9 point decline unexpectedly large and a negative catalyst for Monday’s markets… (Read more.)
3) After European Union finance ministers cut a deal late last Sunday to rescue Cyprus, it appeared a healing period was in store for the island’s troubled finances. World markets paused, then watched the Dow and S&P 500 surge to record highs by the close of this abbreviated week of trading. Yet Bank of Cyprus depositors learned Saturday that they might lose far more than initially disclosed – up to 60 percent in the worst-case scenario.
Considering the proposed 6.75 percent haircut for small depositors drew the ire of Cypriot citizens, this amount is likely to cause tremendous waves of unrest in the country, the EU and beyond (Russian investors hold large stakes in Cyprus’s overgrown banking industry)… (Read more.)