Stocks extend their decline on news that manufacturing contracted by a
much larger than expected amount in September, according to a national
survey.
Just reported, the ISM Manufacturing Index fell 6.4 to 43.5 (consensus
49.5). A reading below 50 is intended to reflect contraction in
manufacturing. ISM prices paid, which includes energy and food, but
excludes crude oil, fell a sharper-than-expected 23.5 to 53.5
(consensus 73).
Separatedly, August construction spending was unchanged
month-over-month, which was better than the expected decline of 0.5%.
On average, construction spending has declined 0.3% each month in 2008.
General Electric (GE 23.32, -2.19) is the main laggard within the
S&P 500. The stock is getting hammered on no specific news item,
although there is concern that the cost to insure GE Capital debt for
five years is at 626 basis points, according to Reuters. The cost to
protect GE Capital debt traded between 10 and 15 basis points in 2006.