A soft reading on manufacturing activity weighed on the Dow Jones Industrial Average and fueled worries about stagnant economic growth, although stocks trimmed the worst of Tuesday's losses
The Dow Jones Industrial Average sank 54.90 points, or 0.4%, to 13035.94, as investors returned from the holiday weekend. The Dow had fallen as many as 113 points, briefly pushing below 13000, a level the blue-chip benchmark has hovered above for more than a month.
The Standard & Poor's 500-stock index dropped 1.64 points, or 0.1%, to 1404.94. The Nasdaq Composite Index reversed course and ended higher, adding 8.10 points, or 0.3%, to 3075.06.
Stocks initially plowed lower after data showed activity in the manufacturing sector slipped last month to its lowest level since July 2009, according to the Institute for Supply Management's purchasing managers' index. A separate report showed that spending on construction projects in July dropped the most in a year from the previous month.
"It's not falling off a cliff, but the economy continues to deteriorate," said Gary Flam, portfolio manager at Bel Air Investment Advisors.
Materials, industrial and energy stocks, those most closely tied to global growth, ended with the sharpest declines. Heavy-machinery maker Caterpillar (CAT)
Ford Motor (F)
General Motors (GM)
In Europe, the Stoxx Europe 600 fell 1.1% to snap a two-session winning streak. The euro zone's manufacturing purchasing managers' index contracted for the 13th month in row in August. Additionally, Moody's Investors Service cut its outlook on the European Union's triple-A credit rating to negative.
Spanish and Italian bond yields slid, as investors took comfort in reports that European Central Bank President Mario Draghi said that buying certain government bonds would fall within the central bank's mandate. Investors are looking ahead to Thursday's conclusion of the ECB's policy meeting for signs of a bond-buying program aimed at containing the euro-zone's debt crisis.
In Asia, the Shanghai Composite declined 0.8% after a reading on activity in China's manufacturing sector, released Monday, shrank in July at the fastest clip since March 2009. Japan's Nikkei Stock Average slipped 0.1%.
Crude-oil prices sank 1.2%, to settle at $95.30 a barrel, while gold prices rose 0.5%, to settle at $1,692.90 a troy ounce. The dollar rose against the euro and yen. The yield on the 10-year Treasury note rose to 1.581% as demand waned.
In deal news, Medicis Pharmaceutical (FB)
Questcor Pharmaceuticals (QCOR)
Campbell Soup (CPB)
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