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Market Update

U.S. Factory Activities Decline, Construction Picks Up

Author: Nichole Harper
Last Update: 11:35 AM ET June 03 2013

11:30 AM New York – U.S. stock traded sideways. Construction activities increased 0.4% in April according to a government report and factory activities shrank in May. On merger Monday, Mid-American Apartment Communities and Colonial Properties Trust agreed to a merger that will create a company worth $8.6 billion.

Market indexes on Wall Street traded sideways after U.S. factory activities edged up weak reading from China.

S&P 500 index declined 0.61 to 1,630.02 and the Nasdaq Composite Index declined 0.4% or 13.61 to 3,442.01.

According to a private survey conducted by the Institute for Supply Management, showed its manufacturing index decreased to 49 in May from 50.7 in April. Any reading below 50 indicates contraction.

The last time the index dropped below 50 was in November 2012, just after the East Coast was struck by a massive storm Sandy.

The new orders index dropped to 48.8 from 52.3 and exports index declined to 51 from 54.

In a separate report the Commerce Department said construction activities rose 0.4% to an annual rate of $861 billion. The department also revised its March estimate to a decline of 0.8%, smaller than previous forecast.

According to the report, private residential construction spending eased 0.1% and private non-residential spending increased 2.2%.

Asian Markets

Market indexes in Shanghai and Hong Kong pared gains after government data suggested weakness in manufacturing and service sectors.

The official manufacturing purchasing managers’ index in May increased to 50.8 from 50.6 in April. Any number higher than fifty indicates expansion. The government index is heavily weighted in favor of large state controlled enterprises that rely on government spending.

The official index for service industry released earlier today indicated growth slowed to 54.3 in May from 54.5 in April, the lowest reading since September last year.

The private survey of manufacturing industry tracked by HSBC and Markit that includes smaller and private enterprises released today declined to 49.2 in May from 50.4 in April. The index declined to the lowest since October 2012.

Market indexes extended losses in Mumbai for the second day by 0.8% and the index in Seoul fell 0.6%.

Stocks in Review

Apple Inc (AAPL) declined 1% in early trading as the tech giant is scheduled to appear in court to defend conspiracy charges for price fixing of electronic books.

American International Group Inc (AIG) dropped 2% as the company is scheduled to make its arguments in a New York State court this morning against the approval of $8.5 billion mortgage settlement with investors and Bank of America for $8.5 billion. AIG is demanding more Bank of America to pay billions more to settle claims linked to faulty mortgage securities.

Cracker Barrel (CBRL) increased 5% after the restaurant chain operator reported fiscal third quarter earnings of $1.02 a share and revenues were ahead of estimates.

The restaurant chain also lifted its annual earnings outlook and it dividend.

Mid-American Apartment Communities (MAA) declined 4% and Colonial Properties Trust (CLP) soared 5% after the two companies agreed to merge to create a real estate investment trust with a market value of $8.6 billion.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc