Any market optimism that carried over from Friday’s end of both the second quarter and first half was eased today, as stocks slid early after a survey of purchasing managers showed a distressing and surprising contraction of U.S. manufacturing activity in June. Equities managed to rally back, though, by day’s end.
The Institute for Supply Management said its June Purchasing Manufacturers Index fell to 49.7, down from 53.5 in May, the first time the index fell below 50 since 2009. Economists were expecting the index to decline to 51.5. The figures mark the end of a three-year run of growth in this metric of domestic manufacturing.
Lost in the bad news was a report from the Commerce Department showing construction climbing to its best showing since December 2009.
Market watchers also looked toward light volume as a catalyst for the fall, with many traders taking the week off ahead of the Fourth of July holiday on Wednesday.
Stocks gained ground during the first half, with the Dow up 5%, the S&P ahead 8% and the Nasdaq up 12.5%. For the day, Monday’s results left the Dow down 0.07% at 12,871, while the S&P inched up 0.25% to 1,355 and the Nasdaq ended up 0.55% to 2,951.
In corporate news, Dell (NASDAQ:DELL) moved to acquire Quest Software (NASDAQ:QSFT) for $2.4 billion, beating out several private equity firms for the enterprise software maker. The market reacted with a bit of a snore, as Dell shares dropped just under 1%, while Quest eked out a fractional gain, although at $27.83 the shares are just under the $28 per share offer price.
Bristol Myers (NYSE:BMY) announced that it will buy biotechnology company Amylin Pharmaceuticals (NASDAQ:AMLN) for about $5.3 billion in cash. Amylin shares soared over 8% on the news, while BMY was ahead by a fraction.
Fellow pharma powerhouse GlaxoSmithKline (NYSE:GSK) was also ahead on the day, up just over 1% despite agreeing to pay a $3 billion settlement to resolve criminal and civil charges linked to the company’s illegal promotion of prescription drugs and its failure to report safety data. The settlement is the largest health care fraud fine in U.S. history.
Best Buy (NYSE:BBY) rallied 6% on the day as investors mulled over the continued talk about founder Richard Shulze trying to take the company public. And Wal-Mart (NYSE:WMT) touched both a 52-week and post-split high during the day before settling in at a small loss. Discount retailer Dollar Tree (NASDAQ:DLTR) went the other way, falling just over 3% by the end of trading.
Investors continue to fret over Groupon (NASDAQ:GRPN), as the shares gapped down 10.5% on the day on worries about earnings.
On the flip side, hot-dog maker and Fourth of July icon Nathan’s Famous (NASDAQ:NATH) shares are up more than 40% year-to-date, outperforming 482 of the stocks in the S&P 500, including eBay (NASDAQ:EBAY) and Whole Foods (NASDAQ:WFM), and only trailing Apple’s (NASDAQ:AAPL) year-to-date return by a few percentage points.
- Smith & Wesson (NASDAQ:SWHC): Up 7% (58 cents) to $8.89
- Constellation Brands (NYSE:STZ): Up 6.46% ($1.75) to $28.81 (read “Don’t Get Starry-Eyed Over Constellation”)
- James River Coal (NASDAQ:JRCC): Up 5.54% (15 cents) to $2.86
- Navistar (NYSE:NAV): Down 4.51% ($1.28) tp $27.09
- Cirrus Logic (NASDAQ:CRUS): Down 3.89% ($1.16) to $28.69
- Terex (NYSE:TEX): Down 3.36% (60 cents) to $17.23
Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing he is long AAPL.