Major Averages Close Lower

Volume is the lightest since the Sept. 11 terrorist attacks. The Fed will meet tomorrow.
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Updated from 2:54 p.m. EDT

The major stock averages closed slightly lower Monday, but volume was the lowest since the Sept. 11 terrorist attacks, as traders appeared to be unwilling to make any big commitments ahead of tomorrow's meeting of the Federal Reserve's policymaking arm.

The

Dow Jones Industrial Average

finished down 11.49 points, or 0.1%, to 8836.07. The

Nasdaq

lost 20.88 points, or 1.4%, to 1477.92, and the

S&P 500

was off 2.79 points, or 0.3%, to 1038.15. Monday marked the first trading day of the fourth quarter and the traditionally volatile month of October. Volume was a little lighter than it has been during the last two weeks. About 1.4 billion shares changed hands on Nasdaq, while the

New York Stock Exchange

traded 1.1 billion shares.

Stocks took little direction from a slew of reports Monday that mostly depicted economic conditions before the Sept. 11 attacks. The National Association of Purchasing Management's manufacturing index fell to 47 in September from 47.9 in August. Anything below 50 shows contraction. Another report showed personal spending rose 0.2% in August, while a third showed construction spending fell 1.1% for its biggest monthly drop in a year.

An Afghan opposition figure predicted the U.S. could begin military action against the country's Taliban government in a matter of days,

Reuters

reported, citing the impasse over the fate of suspected terrorist Osama bin Laden.

In Europe, London's FTSE 100 lost 2.4% to 4786, while France's CAC-40 fell 1.8% to 4005. Japan's Nikkei index closed up 2% at 9972, while Hong Kong's Hang Seng added 3.6% to close at 9951.

Currency continued to be a big story in Asia, where the yen weakened against the dollar and the euro. The fall came after a report showed Japanese business confidence had its steepest drop in more than three years.

Overnight,

Federal-Mogul

(FMO) - Get Report

said it plans to seek Chapter 11 bankruptcy protection as it struggles to deal with asbestos-related lawsuits. Meanwhile, two banks agreed to lend

SwissAir

$617 million, enough to keep the carrier in business by making a looming debt payment to a partner.

At around 4 p.m. EDT, the 10-year Treasury note was gaining 10/32 to 103 18/32, yielding 4.55%.