By PALLAVI GOGOI
AP business writer
September 05, 2012
NEW YORK — Stocks zigged and zagged after reports that the U.S. economy is weakening at a time when China and Europe are also slowing.
The Dow Jones industrial average closed down 54.90 points at 13,035.94 on Tuesday. Heavy equipment maker Caterpillar was the weakest stock in the Dow average, slipping 3 percent, or $2.67, to $82.66. The Standard & Poor’s 500 index fell 1.64 points to 1,404.94.
The Nasdaq index bucked the losing trend, gaining 8.10 points at 3,075.06. A big reason was that the index’s biggest stock, Apple, rose $9.73 to $674.97 after the company invited reporters to a news event next week at which it is expected to announce the long-awaited iPhone 5.
The market got off to a weak start after the Commerce Department reported that U.S. construction spending fell 0.9 percent in July from June, driven lower by a sharp drop in spending on home improvement projects.
A separate report delivered more gloomy news on the economy: the third straight month of contraction in U.S. manufacturing.
“It’s time to go back to school and sharpen up on stocks and pay attention to the numbers,” said Kim Forrest, equity analyst at financial advisory firm Fort Pitt Capital Group. “The numbers show that there’s a lot of weakness out there and investors have gotten lulled into complacency in the last month or so.”
The week will culminate with U.S. nonfarm payroll figures Friday, one of the most important barometers for the world’s largest economy. Federal Reserve chairman Ben Bernanke has indicated that the central bank is inclined to provide a new stimulus if it’s needed.
Despite the gloom, Americans continued to buy cars thanks to model-year closeouts, low-interest financing and appealing new models.
In Europe, Moody’s warned that it could downgrade the credit rating of the European Union as a whole, citing the continent’s lingering debt crisis. That sent markets broadly lower in Europe. Benchmark indexes fell 1.2 percent in Germany, 1.6 percent in France and 1.5 percent in Britain.
The focus this week will be on the European Central Bank President Mario Draghi, who is expected to announce details Thursday of a new bond-buying program intended to bring down the borrowing costs of countries such as Spain and Italy.
The price of oil also slipped on worries that demand would fall. U.S. benchmark crude fell $1.17 to $95.30 in New York.
In other news:
DOW CHEMICAL: It is creating a new global business unit structure and is establishing an executive committee. The Midland, Mich.-based company said the global business unit model will include business presidents who will be responsible for helping to increase earnings and advancing the company’s strategy. The business presidents will report to the executive committee.
CONSOL ENERGY: It fell 4.5 percent after the company said it will temporarily idle a mine because of weak steel demand. The stock lost $1.37 to end at $28.83.
MEDICIS PHARMACEUTICAL: It soared 38 percent. The company said it would be acquired by dermatology products maker Valeant Pharmaceuticals International. Medicis jumped $12.09 to $43.65.
FEDEX: It lowered its first-quarter earnings outlook below its previous forecast, saying that the weak global economy hurt revenue growth more than expected.
MCDONALD’S: The fast food chain that brought the hamburger to the world is opening what may be its first vegetarian-only restaurants. The locations in India will serve only vegetarian food because of customer preferences in the region.
CAMPBELL SOUP: Net income rose 27 percent in its fiscal fourth quarter as retailers ran promotions to warm up soup sales and stock up on inventories. The results beat Wall Street expectations and the company issued a rosier outlook for its fiscal 2013.
PFIZER: It says the Food and Drug Administration on Tuesday approved its new drug to treat a rare form of blood and bone marrow cancer.
DICK CLARK PRODUCTIONS: The producer of TV productions, including New Year’s Rockin’ Eve and the Golden Globe Awards, is being sold to a group including investment firm Guggenheim Partners. Financial terms were not disclosed.
MERCK: The German drug giant Merck says 1,100 jobs will be cut in Germany by the end of 2015.
HYUNDAI: A labor union approved a deal, ending one of the costliest strikes ever at South Korea’s largest car maker.