U.S. stocks were lower today in morning trading as a string of manufacturing indexes around the world showed a widespread contraction.
In morning trading, the Dow Jones industrial average was quoted down 386.53, or 4.38%, at 8,442.51, while the S&P 500 was down 44.50, or 4.97%, at 851.74. The Dow had gained 14.5% over the past five trading sessions.
In the U.S., the Institute for Supply Management reported that its manufacturing index fell to a worse-than-expected 36.2 in November from 38.9 in October, the lowest reading since the recession of 1982.
Overnight, separate regional manufacturing surveys computed by different organizations showed deep declines around the world.
In China, the manufacturing index fell to 38.8 in November from 44.6 in October, a record drop.
Another manufacturing index for Europe fell to 35.6 in November from 41.1 in October. In Russia, a similar index fell to 39.8 in November from 46.4 in October, worse than when the government in Moscow defaulted on its debt in 1998. All the indexes are based on a methodology in which a reading below 50 indicates a contraction in manufacturing.
It appears that Europe has caught up to or surpassed the U.S. in the race to show in which region the manufacturing sector is declining the most rapidly, Robert Brusca, chief economist at consultancy FAO Economics, wrote in a note to clients. Auto companies in Germany are cutting back on hours. Auto companies everywhere are cutting back and are in trouble.
U.S.-based car manufacturers are expected to report poor November sales this week. In Spain, car sales were already reported down 49.6% in November; in South Korea, sales are down 27%. The CEOs of the Big Three automakers are headed to Washington this week to ask for $25 billion in financial aid. The Senate will hold a hearing on the matter Thursday and the House of Representatives the next day.