(CBS/AP) NEW YORK - Signs that domestic demand for goods and services is shrinking is kept a lid on stocks Monday, as investors wrestle with fresh evidence that the U.S. economy is slowing down.
The Dow-Jones Industrial Average, which has not closed below 12,000 since December, dipped 17 to end at 12,101.23. The S&P 500 and the Nasdaq were largely flat on the day, closing at 1,278.08 and 2,760.01, respectively.
Coming off last week's poor U.S. jobs report, investors got more bad news Monday when the Commerce Department said that orders for factory goods fell 0.6 percent in April from March. Companies placed fewer orders to U.S. factories for the second straight month and a key measure that tracks business investment plans fell, adding to evidence that the economy is weakening.
Demand for so-called core capital goods, such as heavy machinery and computers, dropped 2.1 percent in April. That followed a 2.3 percent decline in March.
Core capital goods are a good proxy for business investment plans. The declines suggest companies may be worried about a weaker U.S. job market, which could crimp consumer spending. Businesses may also fear the worsening European debt crisis and slower growth in China could slow demand for U.S. exports.
The government said Friday that U.S. employers added only 69,000 jobs in May, the fewest in a year and the third straight of subpar hiring. The unemployment rate rose from 8.1 percent in April to 8.2 percent last month.
Factories were one of the few industries to create jobs in May. They added 12,000 jobs, helped by rising demand for U.S. exports and a boom in car sales.
Indeed, even with the declines factory orders are well above their recession lows. Orders in April totaled $465.98 billion, up 38.7 percent from the recession low reached in March 2009. Orders are still 3.1 percent below the peak reached in December 2007, the month the recession began.
Economists said they expect the recent decline in factory orders to be reversed in the coming months. They predicted manufacturing would remain a source of strength for the economy this year.
John Ryding and Conrad DeQuardros of RDQ Economics noted that the Institute for Supply Management's survey of manufacturing activity showed new orders rose to a 13-month high in May.
"We think U.S. manufacturing remains in good shape and that it will continue to expand at a solid rate in the coming months," they wrote in a note to clients.
Still, the April report on factory orders was discouraging.
Demand for durable goods, items such as autos and aircraft that are expected to last at least three years, were flat in April. That represented a downward revision from a preliminary estimate that durable goods orders had risen a slight 0.2 percent in April.
Orders for nondurable goods, which include processed food, chemicals, gasoline and paper, fell 1.1 percent in April. Part of that drop likely reflected lower gas prices, which have tumbled since peaking in early April. The figures are not adjusted for inflation.
Orders for transportation equipment rose 2.2 percent. That largely reflected a 7.2 percent rise in demand for commercial aircraft, which offset a 0.5 percent drop in demand for autos and auto parts.
Demand for primary metals such as steel increased 0.9 percent. But machinery orders fell 2.9 percent, reflecting weakness in orders for industrial machinery and turbines and generators.
Orders for computers declined 5.9 percent, while demand for non-defense communications equipment fell 17.4 percent.
Elsewhere around the world, markets also took a beating Monday as weak hiring in the U.S. sent investors fleeing from stocks and intensified fears that a global recession was in the making. The dismal report released Friday came on the heels of other data that showed weak economic conditions in Europe and Asia.
Unemployment in the 17 countries that use the euro currency stayed at a record-high 11 percent in April. And there were signs that growth in China, which helped sustain the global economy through the 2008-2009 recession, is slowing significantly. China's manufacturing weakened in May, according to surveys released Friday.
Germany's DAX lost 1.4 percent to 5,963.41 and France's CAC-40 shed 0.3 percent to 2,940.33. Markets in Britain were closed for a public holiday.
Markets came under siege in Asia earlier in the day. Japan's Nikkei 224 index dropped 1.7 percent to close at 8,295.63, its lowest finish since Nov. 28, 2011. The broader Topix index ended below the 700 mark for the first time since December 1983, Kyodo News Agency said.
Hong Kong's Hang Seng tumbled 2 percent to 18,185.59. South Korea's Kospi shed 2.8 percent to 1,783.13. Benchmarks in Taiwan and Indonesia fell 3 percent and 4.3 percent, respectively.
Mainland Chinese shares also lost ground, with the benchmark Shanghai Composite Index falling 2.7 percent to 2,308.55. The index's drop of 64.89 points was the biggest this year.
"U.S. jobs numbers were not the only weak reading as manufacturing output data in China and the U.S. were also lower, and euro area unemployment reached a record level," Stan Shamu of IG Markets in Melbourne, said in an email.
"There aren't many positives for risk assets at the moment," he said.
American employers added just 69,000 jobs in May, the fewest in a year, and the unemployment rate increased to 8.2 percent from 8.1 percent. Economists had forecast a gain of 158,000 jobs.
The report, considered the most important economic indicator each month, also said that hiring in March and April was considerably weaker than originally thought.
But the bleak outlook was balanced by what some analysts said was a sell-off that could result in good bargains for oversold stocks.
"I think it's good in terms of trading, because when there is some panic selling, then the selling pressure will be released and the short-term bottom will be there, suggesting a technical rebound," said Linus Yip, strategist at First Shanghai Securities in Hong Kong.
Falling prices for industrial metals like copper and aluminum, which are widely used in construction and manufacturing, hurt mining and resource shares. Anglo-Australian mining giant Rio Tinto Ltd. fell 4.7 percent. Hong Kong-listed Jiangxi Copper Co. lost 3.6 percent. Energy Resources of Australia plummeted 8.9 percent.