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Stocks Lower in Midday Trade           09/02 12:21

   U.S. stocks were mostly lower in early afternoon trading Tuesday even after 
news that the economy was gaining strength. The S&P 500 dipped back below 2,000 
points as oil producers weighed the index down.

   NEW YORK (AP) -- U.S. stocks were mostly lower in early afternoon trading 
Tuesday even after news that the economy was gaining strength. The S&P 500 
dipped back below 2,000 points as oil producers weighed the index down.

   Investors looked ahead to major events later this week. The European Central 
Bank holds a meeting on Thursday, and a key U.S. jobs report comes out Friday.

   KEEPING SCORE: The Dow Jones industrial average slipped 41 points, or 0.2 
percent, to 17,057 as of 12 p.m. Eastern time. The Standard & Poor's 500 index 
dipped four points, or 0.2 percent, to 1,999. The Nasdaq rose four points, or 
0.1 percent, to 4,583.

   ECONOMY: Two reports out Tuesday offered encouraging signs of U.S. economic 
growth. The Institute for Supply Management, a trade group, said its gauge of 
manufacturing reached 59 in August, the highest level since March 2011, buoyed 
by new orders for goods and increased production. Separately, the Commerce 
Department said that construction spending surged 1.8 percent in July, the 
biggest increase in more than 2 years.

   REACTION: "It's clear we have a very solid economic expansion, but the stock 
market isn't buzzing much at all," said Anastasia Amoroso, Global Market 
Strategist at J.P. Morgan Funds. The explanation, she said, is that signs of 
solid growth raise the odds that the Federal Reserve will move to lift 
short-term interest rates. Rate increases typically slow stock markets down.

   "We're moving closer and closer to higher rates," Amoroso said, "so strong 
economic momentum could actually put a damper on the market."

   MORE TO COME: Traders will be focusing on the U.S. employment report for 
August due Friday. Investor confidence over the U.S. economy has risen 
following several months of strong growth in hiring and corporate profits and a 
series of major corporate acquisitions.

   OIL: The price of crude oil slumped, pulling down shares of oil and gas 
companies. U.S. benchmark crude fell $1.86 at $94.10 a barrel in New York. 
Energy companies were the biggest losers among the 10 sectors in the S&P 500 
index.

   CRUISE-SHIP DEAL: Norwegian Cruise Line Holdings jumped 12 percent on the 
news that it had agreed to buy Prestige Cruises International for $3 billion. 
Buying Prestige will help Norwegian compete with its larger rivals: Carnival 
Corp. and Royal Caribbean Cruises. Norwegian Cruise Line's stock gained $3.89 
to $37.20.

   DRUG STRUGGLES: Exelixis lost more than half its value following news that 
the drug developer's potential treatment for prostate cancer fell short in 
late-stage research. The company's stock plunged $2.22, or 53 percent, to $1.95

   BONDS: U.S. government bond prices dropped Tuesday, pushing up long-term 
interest rates. The yield on the 10-year note climbed to 2.40 percent, up from 
2.35 percent late Friday.

   EUROPE: Major markets across Europe were mixed. Germany's DAX rose 0.3 
percent, and the CAC-40 in France dipped 0.1 percent. Britain's FTSE 100 was 
flat.

   ASIA: Japan's Nikkei 225 gained 1.2 percent, while China's Shanghai 
Composite jumped 1.4 percent. Hong Kong's Hang Seng eked out a gain of 0.1 
percent.

   DOLLAR RIDES, EURO SLIDES: The euro continued its summer slide, hitting a 
one-year low against the U.S. currency around $1.3110. Recent economic reports 
have shown the eurozone's economy slowing to a crawl, and that has weighed on 
the currency. The dollar also gained against the yen, rising to 104.88 yen from 
104.35 yen late Monday.

   CHINA CHILL: Indicators such as power generation, steel output and property 
sales point to continued weakness in the world's No. 2 economy, raising 
expectations that the Chinese government will take steps to support growth.

   WHAT'S NEXT: "We still expect China's overall economy to cool toward the 
year's end, and to stay weak through 2015," said Wang Tao, an economist at UBS 
in Hong Kong.


(KA)


 
 
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