Wall Street's momentum turned negative over the past week as concerns mount about a US economic slowdown and retail sales ahead of the Christmas shopping season, analysts said.
In the week to Friday, the Dow Jones Industrial Average blue-chip index fell 0.70 percent to 12,194.13.
The broad-market Standard and Poor's 500 lost 0.30 percent to 1,396.71 while the technology-stacked Nasdaq lost 1.91 percent to close at 2,413.21.
Market-watchers said stocks declined in the past week due to weaker economic reports, but pointed out that the Dow recently hit record heights over 12,300 points and that the index remains above 12,000 points.
"A week of generally soft data -- notably declining durable goods orders, declining new home sales, lackluster November chain store sales, and lower construction spending -- was capped off by the first dip below 50 in the manufacturing ISM index since April 2003," said Global Insight chief US economist Nigel Gault.
"It's very typical that before Thanksgiving, the market is rising in anticipation of good holiday sales and then it's down until mid-December, then up again before the end year," said Marc Pado, an analyst at Cantor Fitzgerald.
A surprise contraction in US manufacturing activity last month, according to a survey released on Friday by the Institute of Supply Management, kept stocks depressed going into the weekend.
The ISM index of national industrial activity fell to 49.5 percent last month from 51.2 percent in October.
"More evidence that the manufacturing sector will not provide much boost to economic growth in the months ahead is prompting investors to take money off the table," said analysts at Briefing.com.
Last month's nonfarm payroll report, due for release this coming Friday, is likely to be the coming week's most-eagerly awaited report.
Most economists expect nonfarm payrolls to have increased by 115,000 positions last month, compared with tepid payroll growth of 92,000 in October.
The unemployment rate is expected to tick up a notch to 4.5 percent from 4.4 percent.
The coming week will also yield fresh updates on factory orders, consumer credit and consumer sentiment.
The University of Michigan's preliminary reading on consumer sentiment for this month is expected to improve a shade to 92.5 from a reading of 92.1 last month.
Investors closely track consumer sentiment as consumer spending accounts for approximately two-thirds of all US economic growth.
Some economists, however, are worried that consumers might restrict their holiday spending this year due to the housing market slowdown.
Such concerns were reinforced by Wal-Mart which said its comparable four-week sales last month declined 0.1 percent from a year ago.
The weaker economic reports of the past week have raised expectations that the Federal Reserve will now move to trim US borrowing costs during the first quarter of next year.
"The mounting evidence that growth has slowed further in the fourth quarter is bolstering the case that the next Fed move will be a rate cut, perhaps as early as the first quarter," Gault said.
The Fed hiked its key fed funds rate 17 times until August in an attempt to tame inflation and keep growth in check, but has since kept rates held at 5.25 percent.
Traders, however, are chalking up bets that the Fed will trim rates back to 5.0 percent next year early next year.
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