- The Washington Times - Tuesday, November 4, 2008

NEW YORK | Wall Street ended the 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 presidential 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. Although trading was quiet, including the often-volatile final hour, the calm doesn’t necessarily mean that 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 by a smaller-than-expected amount in September as a rebound in nonresidential activity helped offset further weakness in home building. 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 falloff 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.

In addition, the fiscal year for mutual funds ended Friday, removing one source of selling pressure from the market. Some funds had been selling last month ahead of Oct. 31 for tax purposes and to raise cash.

“What we’ve seen was a rally last week taking a dire depression off the table, and I think now what we have is a severe recession,” Mr. Massocca said. “By and large, the economy is bad, but it’s not as bad as many people think it is. There are still people going to work every day.”

The Dow Jones Industrial Average fell 5.18 points to 9,319.83, after rising as much as 86 and falling 70. The day’s trading range was its narrowest 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.

Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where consolidated volume came to a light 4.36 billion shares compared with 6.23 billion traded Friday.



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