Stocks trade mixed after construction, manufacturing reports; Drop in oil hits energy stocks

Stocks show little direction in choppy trading

NEW YORK — Stocks were little changed Tuesday after a drop in energy stocks canceled out investors’ enthusiasm about reports on construction spending and manufacturing.

The Dow Jones industrial average rose about 15 points in the afternoon following an early slide.

Trading was choppy, a sign that investors aren’t sure where to put their money. Defensive stocks including consumer products makers were among the gainers. Homebuilders fell on concerns that a housing recovery will lose steam. And investors are still wondering whether cost-cutting in Europe to ease countries’ heavy debt loads will spoil a global rebound and hurt a U.S. recovery.

Energy stocks also dragged at the market. Shares of BP dropped more than 12 percent after its latest attempt to stop the oil spill in the Gulf of Mexico failed. The price of oil also fell, hurting other energy stocks.

The volatile trading comes after the Dow had its worst May since 1940, losing nearly 8 percent. All 30 stocks in the index fell during the month. The Dow has dropped in nine of the past 12 trading days.

The euro slid as low as $1.2112, its lowest level since April 2006, before climbing back to $1.2298. The euro’s moves against other currencies have come to reflect traders’ confidence in Europe’s ability to manage a sovereign debt crisis that started in Greece but has started to affect other European nations like Portugal and Spain.

A slew of reports this week on jobs, housing and manufacturing could start to signal whether weakness in Europe is spreading to the U.S.. The biggest report comes Friday when the government releases its May employment numbers.

The Commerce Department said construction spending rose by the biggest amount in nearly a decade. The 2.7 percent April gain was the largest since August 2000. Economists forecast spending would be flat. However, homebuilders’ stocks fell although the report showed a big jump in residential building. That blip upward was expected to disappear now that a homebuyers’ tax credit has expired.

Meanwhile, the Institute for Supply Management said its manufacturing index fell to 59.7 in May from 60.4 in April. The figure was better than economists’ forecast of 59.

“As long as they continue to go on the positive side, I think it will overshadow what’s going on in Europe,” said Charles Massimo, president of CJM Fiscal Management in Melville, N.Y.

In midafternoon trading, the Dow rose 16.93, or 0.2 percent, to 10,153.56. The Standard & Poor’s 500 index fell 3.48, or 0.3 percent, to 1,085.93, while the Nasdaq composite index fell 1.45, or 0.1 percent, to 2,255.59.

Two stocks fell for every one that rose on the New York Stock Exchange, where volume came to 775 million shares, compared with 744 million traded at the same point Friday. Volume has been light because some traders are away for a long Memorial Day holiday. Light volume can intensify swings in the market.

Bond prices fell, pushing interest rates higher. The yield on the benchmark 10-year Treasury note rose to 3.30 percent from 3.29 percent late Friday.

The dollar fell against most other major currencies, while gold rose.

Crude oil fell $1.15 to $72.82 per barrel on the New York Mercantile Exchange.

Kim Caughey, investment analyst at Fort Pitt Capital Group in Pittsburgh, said concerns about a U.S. slowdown because of Europe are overblown.

“We’ve been relying less and less on Europe as a place to sell our goods and services for decades now,” Caughey said.

She noted that traders are likely to continue to be jittery because of headlines about everything from debt in Europe to tension in the Middle East.

“Those are concerns that are going to play not only in the headlines but they’ll find their way into the market,” Caughey said.

BP’s U.S.-listed shares dropped $5.43, or 12.6 percent, to $37.52. The company said its costs tied to the spill are nearing $1 billion. Offshore drilling contractor Transocean Ltd., which owns the well, fell $4.25, or 7.5 percent, to $52.52.

Among consumer stocks, Procter & Gamble Co. rose 39 cents to $61.48 and Kraft Foods Inc. rose 48 cents to $29.09.

Insurer American International Group Inc. rejected a lower offer from Britain’s Prudential for one of its Asian insurance units. Prudential proposed cutting the initial $35.5 billion offer by about $5 billion. AIG shares dropped 69 cents to $34.69.

Hewlett-Packard Co. rose 15 cents to $46.16 after it said it would cut about 9,000 jobs and record $1 billion in charges in the next several years as it creates fully automated commercial data centers. The technology company expects the moves to save it as much as $700 million annually.

High unemployment remains a major obstacle for a strong, sustained domestic recovery. Economists expect the Labor Department’s May jobs report to show that the unemployment rate dipped to 9.8 percent and that employers added 503,000 jobs.

Homebuilder KB Home fell 46 cents, or 3.2 percent, to $14.02, while Toll Brothers Inc. fell 73 cents, or 3.5 percent, to $20.34.

The Russell 2000 index of smaller companies fell 8.85, or 1.3 percent, to 652.76.

Overseas, Britain’s FTSE 100 fell 0.5 percent, Germany’s DAX index rose 0.3 percent, and France’s CAC-40 slipped 0.1 percent.

Asian markets fell following a report that China’s manufacturing industry slowed last month. China has had one of the world’s strongest economies in recent years, so any slowdown there could stoke fears that a global rebound is slowing.

Hong Kong’s Hang Seng fell 1.4 percent, while Japan’s Nikkei stock average lost 0.6 percent.