Wall Street stumbled Friday after a key survey showed manufacturing unexpectedly contracted in November for the first time in more than three years, stoking concerns that the economy won’t be able to achieve a soft landing.
NEW YORK (AP) — Wall Street stumbled Friday after a key survey showed manufacturing unexpectedly contracted in November for the first time in more than three years, stoking concerns that the economy won’t be able to achieve a soft landing.
Stocks and the dollar were socked after the Institute for Supply Management said its index on manufacturing fell to 49.5 from 51.2 in October. Economists had been expecting 51.5. Anything under 50 indicates the manufacturing sector is contracting.
The report, based on a survey of corporate purchasing managers, was seen by some on Wall Street as possibly indicating that the Federal Reserve might have overshot the mark in more than two years of interest rate hikes that ended in June. Wall Street had been expecting the Fed would hold interest rates steady at its Dec. 12 meeting, and now there is a growing belief the central bank may soon cut rates because of economic weakness.
“This is just additional confirmation that the economy is not only slowing but quite possibly going into a recession,” said Hugh Moore, a partner with investment firm Guerite Advisors. “It’s not just the housing and auto industry any longer, now we’re finding out that manufacturing in general is slowing.”
Moore said an ISM number below 50 has preceded every U.S. recession since the 1960s.
Leading the Big Board lower in volatile trading were shares of manufacturers like 3M Co., Caterpillar Inc., and United States Steel Corp. According to preliminary calculations, the Dow Jones industrial average fell 27.80, or 0.23 percent, to 12,194.13.
Broader stock indicators also declined. The Standard & Poor’s 500 index dropped 3.91, or 0.28 percent, to 1,396.72, and the Nasdaq composite index fell 18.56, or 0.76 percent, to 2,413.21.