Stocks were mostly lower in choppy trade on Monday as the latest data on manufacturing continued to paint a mixed picture on the strength of the economy.

The Standard Poor’s 500-stock index lost 0.1 percent, the Dow Jones industrial average was 0.4 percent higher and the Nasdaq composite fell 0.6 percent.

The S.P. 500 fluctuated between losses and gains but the Dow managed to post a slight gain, helped by a jump in Merck Company.

“We are at all-time highs and the data is not supporting the all-time highs. There is a realization that unless things start to turn around we could be in for a little bit of a correction,” said Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York.

A measure of manufacturing activity in the United States contracted in May for the first time in six months, as new orders slipped and there was less demand for exports. The Institute for Supply Management said its index of national factory activity fell to 49 points in May from 50.7 in April, short of expectations for 50.7. A reading below 50 indicates contraction in the manufacturing sector.

In a week that will feature the release of several significant reports on the economy, the most important will be the Labor Department’s nonfarm payrolls report for May, scheduled for Friday. A survey of analysts by Reuters shows an expected 170,000 jobs added, slightly higher than the 165,000 in April.

The Fed’s so-called Beige Book survey of regional conditions is to be released on Wednesday.

Trading has been volatile for the past week, with intraday swings of 1 percent up or down on concerns that the Fed may reduce its monetary stimulus earlier than expected. On Friday, Wall Street dived at the end of the session, finishing more than 1 percent lower.

A popular options gauge that measures the level of anxiety in the market also showed a jump. The CBOE Volatility index, or VIX, was up more than 2 percent at 16.64.

In company news, Merck shares rose 4 percent after the company’s drug designed to unmask tumor cells and mobilize the immune system into fighting cancer helped shrink tumors in 38 percent of patients with advanced melanoma in an early-stage study.

But F5 Networks, a network gear maker, fell more than 6.7 percent after Morgan Stanley downgraded the company to equal weight from overweight.

Markets in Asia and Europe were rattled on Monday by data showing that China’s economy lost some steam last month, with factory activity shrinking for the first time in seven months and cooler growth in services.

European markets, however, erased much of their losses through the day, helped by gains in mining companies.

“The overall theme for the coming weeks is going to be a very volatile trading environment and you are going to have the U.S. and Japan being a significant driver to what is happening in Europe,” said a Rabobank strategist, Lyn Graham-Taylor.

A mixed reading in Chinese data kept intact worries about its growth momentum and weighed on oil as Brent crude slipped to $100 a barrel for the first time in a month, though the figures were not bad enough to trigger active selling in other growth-sensitive commodity or currency markets.

In the debt market, German bond futures had a steady start to the week, while there was more selling of euro zone periphery debt amid signs its 10-month rally might be drawing to a close.

Speaking in China, the president of the European Central Bank, Mario Draghi, said the bank’s yet-to-be-tested bond buying program was “designed to keep government bond yields just below ‘panic’ levels,” not to help government solvency, and that the bank would not intervene if spreads were “fundamentally justified.”

The dollar index, measured against a basket of six major currencies, dropped 0.9 percent. That weakness, and a growing view that the E.C.B. was unlikely to cut interest rates again this week, pushed the euro up 1.9 percent, to $1.3096.

The broadly bearish sentiment in Asia took a toll on Japan’s Nikkei stock average again, as it slid 3 percent to a six-week low.

Article source: http://www.nytimes.com/2013/06/04/business/daily-stock-market-activity.html?partner=rss&emc=rss