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September 10, 2012

A weak open on Wall Street as China stumbles

From The Associated Press

NEW YORK — Stocks opened slightly lower on Wall Street as troubling economic news from China overshadows hopes of more stimulus from the Federal Reserve.

After the first hour of trading Monday the Dow Jones industrial average was down seven points at 13,299. The Standard & Poor’s 500 slipped half a point to 1,437 and the Nasdaq composite fell nine points to 3,125.

The stumble marks a pause in a rally last week that took the Dow and the S&P 500 to their highest levels in more than four years.

Stock markets rose around the world last week after the European Central Bank announced a long-anticipated plan to support struggling countries in the European Union. Investors are also more hopeful that the Federal Reserve will act this week to support the U.S. economy.

There were several pieces of discouraging news out of China, giving investors more reason to worry that one of the most important engines of the global economy was sputtering. Auto sales growth slowed to 3.7 percent in August, and imports shrank unexpectedly. Factory output also slid to three-year low in August, suggesting that aggressive action in Beijing has yet to gain traction. The Chinese president warned growth could slow further.

The monetary policymaking body of the Federal Reserve meets on Wednesday and Thursday after a surprisingly weak report on U.S. jobs last Friday. Many anticipate a third round of bond purchases or other support for the financial system.

Later on Monday, the Fed releases its consumer credit report. Economists expect the Fed to report that Americans increased their borrowing in July.

Among stocks making big moves:

— Alpha Natural Resources rose 53 cents to $7.43 and Cliffs Natural Resources rose $1.89 to $41.80, the biggest gains in the S&P 500. Metals and mining company stocks shot up on hopes of more buyouts in the sector after the British commodities trading firm Glencore increased its buyout offer for Xstrata, an Anglo-Swiss mining company.

— American International Group fell after the U.S. government said Sunday it was selling shares in the insurer that would decrease its holdings below a majority stake for the first time since the bailout of AIG in 2008 at the height of the financial crisis. AIG’s stock lost 73 cents to $33.26.

— Chesapeake Energy lost over 3 percent, the biggest loss in the S&P, following oil prices lower. The stock was off 69 cents, to $19.65.

 

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