NEW YORK — Wall Street closed narrowly mixed Monday as investors wrestled with record-high commodities prices and data that pointed to a continually weakening economy.
Investors have been trying to determine whether recent pessimism about the economy has been well- founded or overwrought. The Institute for Supply Management’s index of U.S. manufacturing activity came in Monday at 48.3 — indicating a milder contraction than the 48.1 the market expected but still its lowest level in nearly five years.
Furthermore, the Commerce Department reported that construction spending in January fell by 1.7 percent, the steepest in 14 years.
“The two economic numbers that came out today were still rather on the negative side, and they point to further weakness in economic activity,” said Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners.
But rising commodities prices — although they threaten to eat into consumers’ discretionary spending — encouraged Wall Street to pour money into energy, metals and mining companies. Crude oil surged to a record, near $104 a barrel, before settling up 61 cents at $102.45, while gold soared to a record, near $1,000 an ounce.
Silver, corn and soybean prices also hit all-time highs.
The Dow Jones industrial average — after slumping more than 100 points briefly during afternoon trading — finished down 7.49, or 0.06 percent, to 12,258.90.
Broader stock indicators were mixed. The Standard & Poor’s 500 rose 0.71, or 0.05 percent, to 1,331.34, while the Nasdaq composite fell 12.88, or 0.57 percent, to 2,258.60.
Stifel Nicolaus market strategist Joe Battipaglia said he believes stagflation — weak growth amid accelerating inflation — is occurring in the U.S., despite comments last week by Federal Reserve Chairman Ben Bernanke. The Fed chief said inflation should abate as the economy slows, but Battipaglia argued that the chairman made the same pledge in 2006.
“It didn’t play well the first time, and it’s not playing well the second time,” said Battipaglia, noting that the most recent Consumer Price Index shows an annual inflation rate above 4 percent. That’s higher than the target fed funds rate, which has been cut to 3 percent.
“The truth is, the price for everything, except for maybe soft goods and electronics, is going up,” Battipaglia said.
