NEW YORK - Investors rattled by slowdown in manufacturing sector WALL Street stumbled on Friday after a key survey showed manufacturing unexpectedly contracted last month for the first time in more than three years.
The data stoked concerns that the US economy will not be able to achieve a soft landing.
Stocks and the US dollar were socked after the Institute for Supply Management (ISM) said its index on manufacturing fell to 49.5 last month, from 51.2 in October. Economists had been expecting it to rise to 51.5.
Anything under 50 indicates the manufacturing sector is contracting.
The report, based on a survey of corporate purchasing managers, was seen by some on Wall Street as possibly indicating that the Federal Reserve might have overshot the mark in more than two years of interest rate hikes that ended in June.
Wall Street has been expecting the Fed to hold interest rates steady at its Dec 12 meeting, and now there is a growing belief that the central bank may cut rates soon because of economic weakness.
'This is just additional confirmation that the economy is not only slowing but quite possibly going into a recession,' said Mr Hugh Moore, a partner with investment firm Guerite Advisors.
'It's not just the housing and auto industries any longer, now we're finding out that manufacturing in general is slowing.'
Mr Moore said an ISM number below 50 has preceded every US recession since the 1960s.
The Dow Jones Industrial Average fell 27.8 points, or 0.23 per cent, to 12,194.13 on Friday.
Broader stock indicators also declined.
The Standard & Poor's 500 Index dropped 3.91 points, or 0.28 per cent, to 1,396.72, and the Nasdaq Composite Index fell 18.56 points, or 0.76 per cent, to 2,413.21.
Leading the Big Board lower in volatile trading were shares of manufacturers such as 3M Co, Caterpillar, and United States Steel Corp.
AP
