Stock Soaring

U.S. Stocks Plunge Following Dismal Manufacturing Report

Stocks plummet as attention shifts to economic data.

The U.S. stock market declined sharply on Monday, as investors gave back some of last week’s record-breaking rally.

All of Wall Street’s major indices finished with heavy losses on Monday. The Dow Jones Industrial Average (DIA) plunged 264.46 points, or 0.9%, to close at 27,786.95. The blue-chip index was off by as much as 269 points.

The broad S&P 500 Index (SPY) declined 0.9% to 3,114.19.

Meanwhile, the technology-focused Nasdaq Composite Index (QQQ) finished down 1.1% at 8,567.99.

A measure of implied volatility known as the CBOE VIX (VXX) surged on Monday, reaching its highest level in two-and-a-half months. The so-called “fear index” peaked at 15.27 on a scale of 1-100 where 20 represents the historic average. It would eventually settle at 14.32, having gained 13.5%.

In economic data, the U.S. manufacturing sector contracted in November for the fourth consecutive month, marking one of the longest skids since the 2008 financial crisis.

Retirement Day Trader - eBook

Sign up for our Newsletter & get the FREE eBook
Retirement Day Trader:
How to Sell Weekly Options for Steady Income

  • This field is for validation purposes and should be left unchanged.

The Institute for Supply Management’s manufacturing purchasing managers’ index (PMI) fell to 48.1 in November from 48.3 the month before.

“Global trade remains the most significant cross-industry issue,” said Timothy Fiore, who chairs ISM’s manufacturing survey. “Among the six big industry sectors, Food, Beverage & Tobacco Products remains the strongest, while Fabricated Metal Products is the weakest. Overall, sentiment this month is neutral regarding near-term growth.”

Separately, the Commerce Department reported that construction spending plunged 08% in October after falling 0.3% the month before.

The Final Word: The U.S. manufacturing downturn could impact the rest of the economy as we head into an election year. ISM’s numbers suggest the U.S. economy is on track to expand just 1.5% annually.