Monday’s Market Recap: Stocks Lack Direction

The market struggled to pick a direction and run with it during Monday’s trading session, as all three major U.S. indices fluctuated between red and green numbers on the report of a weak manufacturing index. The Dow (^DJI) closed marginally lower on the day, moving only 0.06%. The S&P 500 (^GSPC) finished the day in the red, falling 0.25%, while the Nasdaq (^IXIC) ended today’s session up 0.31%. Experts predicted the manufacturing index would slow by 2% from September to October, from a reading of 43.5 to 41.5. The actual results were made public at 10:00 ET this morning, and posted a higher than expected drop in manufacturing with a number at 38.9. This reading gives investors an idea on where the stock market might be heading in the future. If the monthly index is above 50%, then the reading indicates healthy factory production, and the sector is expanding. October’s reading clearly describes the sector experienced a contraction in the previous month.

Major indices in both Asia and Europe posted positive numbers at the day’s end. News of a rate cut in India, and a commitment from South Korea to infuse over $10 billion into the markets led the bullish charge. The Hang Seng (^HSI) climbed 2.69%, and the Straits Times (^STI) jumped 5%, while the Nikkei (^N225) was closed for a national holiday, but will re-open again on Tuesday. Stocks in Europe climbed higher for the fifth straight trading day after the FTSE closed up 1.51%. Both the DAX (^GDAXI) and the CAC (^FCHI) also ended higher with changes of 0.78%, and 1.17% respectively.

Sweet crude fell almost 5% off of Friday’s gains, due to the fastest contraction in manufacturing in the past 26 years, signifying factories will use less oil for production and transportation. Oil is now trading around $64.25 per barrel. Gold traded higher during market hours on Monday, as prices rose 1.21%, or roughly $8.70. The 10-year treasury bond fell slightly today, yielding 3.9040%.

The dollar didn’t move too much through out the day against the yen, as the closing value decreased only 35 pips, and is trading around the 99.160 yen range. The dollar increased in value versus the euro today, and is worth approximately 0.7906 euros.

Ford (F) and General Motors (GM) announced sharp decreases in sales during the month of October today, as a worsening economy and tight credit restrictions kept consumers from buying new cars this month. Ford experienced a drop in sales by 30%, while GM’s sales fell 45%. GM needs to go back to the drawing board to find a new way to come up with capital to merge with Chrysler, because the Treasury denied GM access to funding from the $700 billion bailout plan.

Circuit City (CC) has announced that it will be closing 155 stores, and cutting staff by 17% in an effort to remain in business until after the holiday season ends. Most analysts believe Circuit City’s bankruptcy is virtually unavoidable. Shares of Best Buy (BBY) rose at the prospect of gaining market share.

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