NEW YORK (AP) — Stocks retreated in early trading ahead of a vote in the Senate to raise the nation’s borrowing limit. Tuesday is the deadline to raise the limit, otherwise the government won’t have enough money to pay all its bills.
In the meantime, investors turned their attention to more weak signals on the U.S. economy. The Commerce Department reported that consumers cut spending in June by the biggest amount in nearly two years. Analysts had predicted a slight increase. Incomes also rose by the smallest amount since September, reflecting the weak job market.
The Dow Jones industrial average was down 35 points, or 0.3 percent, to 12,096 in morning trading. If the Dow closes lower it would be its eighth straight day of losses.
The broader Standard and Poor’s 500 index was down 5, or 0.4 percent, to 1,282. The Nasdaq composite was down 6, or 0.2 percent, to 2,739.
The consumer spending report comes one day after an early stock rally fizzled following a manufacturing report that suggested that the economy was stalling. Many economists, including Federal Reserve Chairman Ben Bernanke, have said the U.S. economy would gain momentum in the second half of the year as gas prices fell and Japan’s factories recovered from the earthquake and nuclear disasters there. Slow U.S. manufacturing growth, a weak job market and concerns about spending cuts in the debt deal have cast doubt on those predictions.
The signs of economic weakness pushed government debt prices higher. The yield on the 10-year Treasury again fell to a new low for the year of 2.72 percent from 2.75 percent Monday. Yields fall when bond prices rise.
Pfizer Inc. led the Dow lower with a 1.5 percent loss. The drugmaker said Tuesday that its second-quarter revenue was slightly below analysts’ expectations.
Archer Daniels Midland Co dropped nearly 5 percent after the company said that it missed Wall Street’s profit forecasts. High-end retailer Coach Inc. also lost 5 percent after it narrowly missed analyst’s profit projections.
The Treasury Department has said that Congress must raise the debt ceiling by the end of Tuesday in order to allow the government to pay all of its bills. The Senate is expected to vote on the bill before the market closes. The House passed the measure Monday night.
Ford, General Motors and Toyota are among automakers that will release July sales figures throughout the day.