US open: Stocks fall as traders weigh Deutsche Bank woes, manufacturing data

US stocks were in the red on Monday as investors continued to keep an eye on Deutsche Bank and assessed manufacturing data.

At 1527 BST the Dow Jones Industrial Average dropped 0.35% to 18,245.39 points, the S&P 500 slid 0.35% to 2,160.77 points and the Nasdaq declined 0.32% to 5,294.856 points.

At the same time oil prices fell as the market continued to weigh up OPEC’s announcement last week about limiting output. West Texas Intermediate dipped 0.68% to $47.91 per barrel and Brent edged down 0.58% to $49.90 per barrel.

Deutsche Bank’s US shares were under the cosh after surging on Friday following a report that it may be able to negotiate a lower settlement with the US Justice Department over its mis-selling of mortgage-backed securities.

On Monday, The Wall Street Journal reported that talks between the two were moving forward, but no deal has yet been presented to senior decision makers on either side. Deutsche Bank shares were not trading in Germany on Monday as markets there were closed for a public holiday.

In economic data, Markit’s final US manufacturing purchasing managers’ index fell to a three-month low of 51.5 in September from 52.0 in August. Still, this was a touch above the flash estimate of 51.4. A reading above 50 signals expansion.

Slower rates of output and new order growth were the main factors weighing on the headline index, which more than offset a stronger contribution from the staff hiring component.

Chris Williamson, chief business economist at IHS Markit, said: “Manufacturing growth slowed to a crawl in September, suggesting the economy is stuck in a soft-patch amid widespread uncertainty in the lead up to the presidential election. The survey saw firms pulling back on expanding production and focusing instead on cost-cutting, as inflows of new business slowed to the weakest seen so far this year.

Separately, the Institute for Supply Management said its manufacturing index rose to 51.5 in September from 49.4 in August, beating forecasts of 50.3.

“After a sharp fall in August, the rebound in the ISM manufacturing index to 51.5 in September should soothe fears that the US economy is headed for a serious downturn,” said Andrew Hunter, US economist at Capital Economics.

“Nevertheless, the index remains at a muted level and the other news today that construction spending contracted in both July and August shows that the factory sector is not the only misfiring part of the economy. As it stands now, we estimate that third-quarter GDP growth was between 2.0% and 2.5% annualised.”

Meanwhile, the Commerce Department revealed US construction spending fell 0.7% month-on-month to $1.142trn. Economists had been expecting a rise of 0.3% in comparison to July.

In company news, Telsa Motors shares jumped after the electric car maker reported record quarterly sales.

Twitter gained after Bloomberg reported late Friday that Alphabet had hired an advisor to evaluate a bid to buy the social networking service site.

Shares in Janus Capital Group and Henderson Group rallied after announcing an all-share merger, which would give the investment management firms a combined market capitalisation of $6bn.