NEW YORK — Wall Street ended its calmest session in recent memory with a narrowly mixed performance Monday as investors largely looked past a weak reading on the manufacturing sector and focused on the election.
Before finishing essentially flat, the Dow Jones industrials moved in a range of 155 points — well below October’s average daily swing of 594. While trading was quiet, including the often-volatile final hour, the calm doesn’t necessarily mean the market has overcome all its worries; analysts said investors weren’t making big moves ahead of the voting.
Stocks showed little lasting impact from the Institute for Supply Management report that its measure of U.S. manufacturing dropped last month to the lowest level since September 1982 as credit conditions tightened and disruptions remained from Hurricane Ike. The trade group said its index of manufacturing activity fell to 38.9 from 43.5 in September, well below the 41.5 economists predicted, according to Thomson/IFR.
A separate report showed construction spending fell less than expected in September as a rebound in nonresidential activity helped offset further weakness in homebuilding. The Commerce Department said construction spending fell by 0.3 percent in September, less than the 0.8 percent decline many economists expected.
The range of data support the growing belief that the economy is in recession, hurt by a drop in lending and slower overall spending. But with the Dow having tumbled more than 14 percent in October — its worst month in 21 years — the market has priced in a significant decline in economic activity. Wall Street must now determine whether the sell-off in stocks is adequate, not enough or overdone.
Stephen Massocca, co-chief executive of Pacific Growth Equities, said the economic readings weren’t a surprise given the hits the economy has taken from the evaporation of lending since September.
He said Wall Street’s tepid reaction also reflects the market’s process of forming a bottom after its sell-off. Investors are also waiting to make big bets until after the election, he said.
The Dow Jones industrial average fell 5.18, or 0.06 percent, to 9,319.83, after rising as much as 86 and falling 70. The day’s trading range was its lowest since Sept. 3.
Broader stock indicators were mixed. The Standard & Poor’s 500 index fell 2.45, or 0.25 percent, to 966.30, while the Nasdaq composite index rose 5.38, or 0.31 percent, to 1,726.33.
Craig Peckham, market strategist at Jefferies & Co., remains cautious. He said the market is still trying to determine how long the slowdown will last and if it will be longer than normal slowdowns, which he suspects it will.
“There continues to be risk to equity values, particularly if we have a long-term downturn,” said. “I think we probably do end up bouncing around for a while, and I think real conviction to the upside or the downside won’t come until people get better visibility on 2009.”
