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U.S. stocks fall as manufacturing growth slows

A trader on the floor of the New

A trader on the floor of the New York Stock Exchange on Wednesday, Dec. 31, 2014, gets ready to celebrate the start of 2015. Credit: Bloomberg News / Jin Lee

U.S. stocks dropped on Friday as signs of a slowdown in manufacturing growth weighed on investor sentiment.

KEEPING SCORE: The Standard & Poor's 500 index fell 10 points, or 0.5 percent, to 2,048 as of 1:42 p.m. on Wall Street Friday. The Dow Jones industrial average fell 76 points, or 0.4 percent, to 17,746. The Nasdaq composite dropped 32 points, or 0.7 percent, to 4,703.

ENERGY: U.S. crude moved between losses and small gains. The price of oil was down 60 cents at $52.67 a barrel in New York. Brent crude, the international standard, declined 92 cents to $56.41.

The decline in oil prices benefits consumers, who are paying less for gas, but it hurts energy companies by causing their revenue to fall. Energy stocks account for about 10 percent of S&P 500 earnings.

The fall in prices will also mean that oil companies will rein in spending on plants and equipment, said Anastasia Amoroso, global market strategist for J.P. Morgan Funds.

"The benefit of lower oil prices is incremental to the damage that they inflict on other parts of the economy," said Amoroso.

SLOWING DOWN: U.S. manufacturing grew at the slowest pace in six months in December, weakened by declines in orders and production. Yet growth remained healthy, a sign manufacturing may help drive the economy's expansion in 2015 as it did last year.

The Institute for Supply Management, a trade group of purchasing managers, said Friday that its manufacturing index fell to 55.5 in December from 58.7 in November. Any reading above 50 signals expansion. November's figure was just below a three-year high reached in October.

The industrial sector was among the biggest decliners in the S&P 500, dropping 0.9 percent.

DRAGHI HITS EURO: The euro retreated against the dollar after European Central Bank president Mario Draghi indicated the bank could back more monetary stimulus.

The euro slumped against the dollar after Draghi indicated the bank could support a government bond-buying program to combat alarmingly low inflation in the 19-country eurozone. The currency fell to $1.2020, its lowest in 4 1/2 years against the dollar.

GLOOMY OUTLOOK: Investors have a number of concerns about Europe as 2015 begins: anemic levels of economic growth in the region, plunging oil prices and an election in Greece on Jan. 25 that could reignite the country's debt crisis if an anti-austerity party wins.

EUROPE'S DAY: European markets slipped. France's CAC 40 fell 0.5 percent while Germany's DAX dropped 0.4 percent. The FTSE 100 index of leading British shares fell 0.3 percent.

BONDS AND CURRENCIES: U.S. government bond prices rose. The yield on the 10-year Treasury note fell to 2.12 percent from 2.17 percent on Wednesday. Markets were closed Thursday for the New Year's Day holiday. The dollar also rose against the Japanese yen, climbing 0.2 percent to 120.15.

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