Stocks fall on drop in industrial growth

The stock market got off to a slow start in April, edging lower after the Standard & Poor’s 500 index eclipsed its all-time high last week.

The main catalyst was a slowdown in U.S. manufacturing growth last month. The decline in the Institute for Supply Management’s benchmark manufacturing index for March was worse than economists had forecast. Stocks started falling shortly after the report came out at 10 a.m. Eastern and stayed lower the rest of Monday.

The Dow Jones industrial average fell 5.69 points, or 0.04%, to close at 14,572.85. The S&P 500 dropped 7.02 points, or 0.5%, to 1,562.17.

Industrial companies declined 1%, the most in the S&P 500.

3M, which makes Post-it notes, industrial products and construction materials, fell 66 cents, or 0.6%, to $105.65. Caterpillar, a maker of construction and mining equipment, dropped $1.33, or 1.5%, to $85.64.

Investors have raised their expectations for the U.S. economy as the market has climbed this year, said JJ Kinahan, chief derivatives strategist at TD Ameritrade. The Dow is up 11.2% in 2013, the S&P 9.5%.

“The numbers have to be outstanding in order to drive the market higher,” Kinahan said. “It’s a different mindset when we’re at these levels.”

The S&P 500 closed the first quarter at 1,569.19, surpassing its previous record close of 1,565.15 set Oct. 9, 2007. The index has recaptured all of its losses from the financial crisis and the Great Recession. The Dow broke through its previous all-time high March 5.

The market has risen this year because of optimism that housing is recovering and that employers and starting to hire again. Strong company earnings and continuing stimulus from the Federal Reserve have also increased demand for stocks.

Small stocks fared worse than large ones Monday.

The Russell 2000, a benchmark of small-company stocks, fell 1.3% to 938.78, paring its gain for the year to 10.5%. It was the index’s biggest decline in more than a month. The Nasdaq composite index dropped 28.35 points, or 0.9%, to 3,239.17.

April is historically the second-strongest month for stocks, Deutsche Bank analysts said in report released Monday. The S&P 500 has gained an average of 1.4% in April, based on returns since 1960, making it the strongest month after December.

The last meaningful setback for stocks started before November’s election. The market slid 6% between Oct. 1 and Nov. 15 in the runup to the vote and immediately afterward on concerns that Washington would be unable to enact reforms to keep the economy growing.

Evidence that growth is continuing, despite the political tensions in Washington, has kept stocks on an upward trajectory since then, leaving investors waiting for dips to add to their holdings.