--Stocks reverse gains after manufacturing data
--ISM's PMI declines to 49.5, contraction territory; 51 reading
was expected
--Materials and industrials shares swoon
By Matt Jarzemsky
NEW YORK--Materials and industrial shares recently led U.S.
stock benchmarks lower after a weak reading on U.S. factory
activity outweighing upbeat Chinese manufacturing data.
The Dow Jones Industrial Average fell 49 points, or 0.4%, to
12976 in midafternoon trading Monday. The Standard & Poor's
500-stock index slid five points, or 0.4%, to 1411. The Nasdaq
Composite Index dropped five points, or 0.2%, to 3005.
The Dow reversed earlier gains of as much as 62 points after the
Institute for Supply Management reported its purchasing managers
index fell to 49.5 last month from 51.7 in October. Economists had
expected a slight decline to 51. Readings below 50 indicate
contracting activity.
"You have your first piece of negative data this week, which was
the factory reading," said Kent Engelke, chief economic strategist
at Capitol Securities, which oversees $4 billion in Richmond, Va.
"I would argue this negative data is going to accelerate throughout
the week. Companies are sitting on their hands because of the
'fiscal cliff.'"
Construction spending increased by 1.4% in October, a much
larger gain from September than the expected increase of 0.5%.
European markets were broadly higher. The Stoxx Europe 600 was
up 0.1% as Greece's plan to reduce its debt burden helped bolster
investors' confidence. Euro-zone manufacturing contracted in
November, but at a slower pace than during the previous month,
indicating that the worst of the slowdown could be over.
Greece's debt agency announced plans to repurchase up to EUR10
billion ($12.98 billion) worth of its outstanding debt, sending the
country's bonds and stock market higher. The Greek ASE Composite
ran up 1.1%.
Asian markets rose after encouraging data on China's
manufacturing sector. The Chinese government's official purchasing
managers index for November rose to a seven-month high of 50.6, up
from 50.2 in October. HSBC's PMI for November rose to 50.5 from
October's 49.5.
Japan's Nikkei Stock Average edged up 0.1% to a seven-month high
and Australia's S&P/ASX 200 gained 0.6% to a six-week high,
while China's Shanghai Composite bucked the trend by shedding 1% to
a near-four-year low.
Front-month crude-oil futures slipped 0.1% to $88.80 a barrel,
while December gold futures rose 0.4% to $1,720.30 a troy ounce.
The dollar lost ground against both the euro and the yen. The
benchmark 10-year U.S. Treasury note's yield rose to 1.639% as
prices fell.
In the corporate arena, shares of SuperValu jumped 11% after
news that private-equity firm Cerberus Capital Management is
willing to pursue multiple options for a deal with the grocer,
including purchasing the entire business.
J.C. Penney fell 3% after Piper Jaffray analysts forecast the
department store chain's same-store sales will fall 32% in the
fourth quarter. The company's top line has struggled as Chief
Executive Ron Johnson attempts to limit promotions in favor of
everyday low prices.
Dell rallied 4.4% after analysts at Goldman Sachs raised their
investment rating on the personal computer maker to "buy" from
"hold" and raised the bank's 12-month price target to $13 from
$9.
Deckers Outdoor gained 7.6% after Sterne Agee analysts raised
their rating on the maker of UGG boots to "buy" from "neutral." The
stock has rallied more than 40% since closing at a three-year low
in October, as investors bet an improved product lineup will
bolster profits.
HCA Holdings rose 0.8% after it announced plans to pay a special
cash dividend of $2 a share, joining a host of companies making
one-time payouts ahead of a potential increase in dividend taxes.
The hospital operator said it plans to sell $1 billion in debt to
finance the offering.
Write to Matt Jarzemsky at matthew.jarzemsky@dowjones.com