Stocks trim losses on pickup in manufacturing

NEW YORK (AP) ? A pickup in U.S. manufacturing last month caused stocks to pare their losses early Monday.

U.S. stocks opened lower, following European markets, after Greece said it will miss deficit reduction targets it had agreed to as part of its bailout deal. Benchmark indexes in Germany, France, and Spain fell more than 2 percent.

The Dow had been down as much as 90 points shortly after the market opened, but pared those losses after the Institute of Supply Management said its manufacturing index did better than Wall Street had predicted in September. It was the first increase after two months of declines. Exports, production and hiring at factories all picked up during the month.

Materials companies, banks and industrial companies ? which rely on an expanding economy to boost profits ? gained the most in the S&P 500 index.

The Dow Jones industrial average slipped 4 points to 10,908 at 10:30 a.m. Hewlett-Packard Co. rose 2.6 percent, the most among the 30 companies that make up the Dow. Wal-Mart Stores Inc. followed with a 1.8 percent gain, then manufacturing conglomerate 3M Co., 1.6 percent.

The S&P 500 slipped 1 point to 1,130. The Nasdaq composite lost 4 points, or 0.2 percent, to 2,41.

Spending on the construction of homes, office buildings and other projects also increased in August after a big decline in July, the Commerce Department reported. Construction spending rose to a seasonally adjusted annual rate of $799.1 billion, up 4.8 percent from an 11-year low hit in March.

Concerns that the U.S. economy is headed for another recession helped send the S&P 500 index, the basis for most mutual funds that invest in U.S. stocks, down 14 percent over the three months that ended in September. It was the worst quarterly performance for the stock market since the financial crisis of 2008.

The Dow Jones industrial average dropped 240 points, or 2.2 percent, to 10,913 Friday to close out the third quarter.