Stocks waver on Wall Street as cuts loom
NEW YORK (AP) — The stock market turned mixed Friday, erasing an early loss, after a report showed a rise in manufacturing.
U.S. manufacturing expanded in February at the fastest pace since June 2011, helped by new orders and rising production. The Institute for Supply Management said its manufacturing index reached 54.2, up from January's reading of 53.1. Any reading above 50 signals growth.
The Dow Jones industrial average edged up 24 points to 14,078 at 12:13 p.m. It was down as much as 117 points in early trading and was wavering between small gains and losses around midday.
The Standard & Poor's 500 index was up two points at 1,514. The Nasdaq composite rose one point to 3,161
The Dow nearly hit its record close of 14,164 Thursday afternoon, before sliding back in late trading, leaving the index lower for the day.
The stock market has surged in recent weeks even in the face of $85 billion automatic across-the-board spending cuts that start kicking in Friday in the absence of a deal to avert them. The cuts are part of a 10-year, $1.5 trillion deficit reduction plan that was designed to be so unpalatable to both Democrats and Republicans that they would be forced to drum up a longer-term budget deal.
President Barack Obama summoned the top congressional leadership to the White House for a meeting designed to give all sides a chance to stake out their positions, though there are no expectations of a breakthrough on Friday.
Any agreement between the White House and Congress on the spending cuts could drive the market up next week, regardless of whether investors consider it a good deal or not, said Stephen Carl, head equity trader at The Williams Capital Group in New York. It's the uncertainty that unsettles investors.
"The lack of clarity is the problem," he said. "I think it will be a positive for the market just as long as there's concrete news."
U.S. consumers increased spending modestly in January but cut back on major purchases, the Commerce Department said Friday. The report suggests that the expiration of tax cuts on Jan. 1 may have made consumers more cautious.
Consumer spending rose 0.2 percent in January compared with December. The gain was driven by an increase in spending on services, partly reflecting higher heating bills. Spending on durable goods, such as cars and appliances, fell 0.8 percent. Spending on non-durable goods, such as clothing, was essentially flat.
The government also reported that American incomes plunged in January at the fastest pace in two decades. American incomes fell 3.6 percent in January, the biggest drop since January 1993. That followed a solid 2.6 percent rise in December.
The Dow is up 7 percent this year and the S&P 500 index is up 6 percent.
The yield on the 10-year Treasury note, which moves inversely to its price, fell to 1.85 percent. That's down from 1.88 percent late Thursday.
Among other stocks making big moves:
— Gap jumped $1 to $33.92. The retailer said late Thursday that its quarterly profits jumped 61 percent, topping analysts' estimates, helped by better sales at its Old Navy stores. Gap also raised its quarterly dividend to 15 cents.
— Best Buy Co. rose 33 cents to $16.74 after the retailer said that its fourth-quarter loss narrowed as better sales in the U.S. helped offset weakness abroad, particularly China and Canada.
— Groupon rose 35 cents to $4.88 following news that CEO Andrew Mason was fired. The online deals company's stock plunged 24 percent Thursday after the company delivered a weak revenue forecast for the current quarter.