Manufacturing Shrinks, and Stocks Start December Weak

Early signs of a slowing economy have investors nervous today. The ISM Index, a closely watched indicator of manufacturing activity, came in at 49.5% today, lower than the 51.7% investors expected. This indicates a slight slowdown in manufacturing activity and has pushed the Dow Jones Industrial Average (DJINDICES: ^DJI  ) down 0.4% and the S&P 500 (SNPINDEX: ^GSPC  ) down 0.5% as of 3:20 p.m. EST.

Given weak manufacturing data, it should be no surprise that General Electric (NYSE: GE  ) , DuPont (NYSE: DD  ) , and 3M (NYSE: MMM  ) are three of the biggest losers on the Dow today. Not only are these companies manufacturers, but they also rely on other businesses for much of their revenue. A slowdown in manufacturing on a large scale will have a big impact on these companies.

Energy stocks are also down despite the fact that oil is up slightly today. ExxonMobil (NYSE: XOM  ) and Chevron (NYSE: CVX  ) are down 0.6% and 1%, respectively, as investors worry about an economic slowdown. These companies are already dealing with declining consumption in the U.S., and further upward pricing pressure could hurt them going forward.

Only a few stocks on the Dow were moving higher today, including Cisco (NASDAQ: CSCO  ) and Travelers (NYSE: TRV  ) , but neither was driven by material news.

This is one of the first real indicators that businesses and consumers are starting to cut back as we head toward the fiscal cliff. But as with the debt ceiling debate, the cutbacks may be lifted when uncertainty is cleared up. That means it's time to prepare ourselves by buying when uncertainty is high.

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  • Report this Comment On December 03, 2012, at 5:05 PM, funfundvierzig wrote:

    Contributing to the pervasive weakness in the shares of DuPont was the revelation last Friday, Nov. 30, 2012 that DuPont Management and their in-house lawyers and PR con artists had deliberately engaged in fraud to mislead investors and the public. U. S. District Court Judge, Richard Wright excoriated this rogue chemical conglomerate for lying about DuPont's contractual rights to use Monsanto's superior Roundup Ready seed technology protected by patents.

    Deliberate lying to investors and the media hardly inspires confidence in DuPont "leadership". Nor will infection with fraud ever be cited as a reason to buy into a enterprise.

    ...funfun..

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