Apple hits new high as stocks slip slightly

After surging over four days to near pre-recession highs, stocks slipped further from that goal Monday following a new sign of a slowdown in the U.S. economy and worries over Europe's struggle to keep its currency union intact.

All three major indexes were down, though barely. The Dow Jones industrial average fell 40.27 points, or 0.3 percent, to 13,553.10.

U.S. stocks are coming off a surge last week that sent the S&P 500 to its highest level in nearly five years. Investors bought stocks on news that the Federal Reserve planned to buy mortgage bonds in an effort to get people to borrow and spend more.

Dampening investor spirits was an Empire State Manufacturing Survey suggesting that conditions for New York manufacturers continued to weaken in September. That followed news from the Fed on Friday that U.S. industrial production fell in August by the largest amount in more than three years.

"We're not completely out of the woods economically, and that's weighing on markets," said Wasif Latif, vice president of equity investments at USAA Investments. He added that, as indexes hover at multi-year highs, "psychological barriers and technical barriers may be tough to breach."

Apple rose $8.50 to $699.78, a new high for the stock market's most valuable company. The company said advance sales for its iPhone 5 available later this week are running at double the rate for its previous version of the phone.

The Standard & Poor's 500 fell 4.58 to 1,461.19. The Nasdaq composite lost 5.28 to 3,178.67.

Six of the ten major industry sectors in the S&P 500 fell, led by materials stocks, down 1.5 percent. Banks and other financial companies were also hit hard, down 1.1 percent.

Energy stocks lost 0.8 percent, climbing back from steeper losses in the afternoon following a plunge in oil that left traders guessing as to the cause. Benchmark crude fell to $96.62, a loss of $2.38, or 2.4 percent, the biggest fall since late July.

Stocks dropped since the opening bell, following overseas markets lower. In Europe, benchmark indexes fell 0.8 percent in France and 0.9 percent in Italy.

Investors in Europe sold partly on signs that setting up a new authority overseeing European banks could take longer than expected following a disappointing meeting of the region's financial ministers over the weekend. The new authority would be able to bail out banks directly. Investors are worried that collapsing banks in the region could spread panic, leading to a breakup of the monetary union.

After the surge in U.S. stocks last week, the Dow Jones industrial average came with 4 percent of its all-time high of 14,164 on Oct. 9, 2007. Two month later, the Great Recession began, as did a painful spiral down in stock prices to 12-year lows.

In the Empire State survey, the general business conditions index slipped five points to minus 10.4, its second consecutive negative reading. The new orders index fell nine points to minus 14.0, its third straight negative reading. Both reached their lowest levels in almost two years.

Also on Monday, China filed a World Trade Organization case challenging U.S. anti-dumping measures on billions of dollars of kitchen appliances, paper and other goods, further straining trade relations as global demand weakens.

Earlier, the Obama administration said it would file its own WTO case this week. It says China improperly subsidizes exports of cars and car parts.

Among stocks making big moves Monday, Office Depot Inc. rose 13 cents, or 5 percent, to $2.60 after an investment firm pushing for changes at the office-supply chain announced it had become the retailer's largest shareholder. Office Depot has struggled recently because businesses have cut spending at its stores as the economy slowed.

Iris International Inc., a maker of medical test products, jumped $6.12, or 46 percent, to $19.54 after its board agreed to sell the company to Danaher Corp., a health care and industrial manufacturer.

More than two stocks fell for every one that rose on the New York Stock Exchange. Volume was light at 3.2 billion shares.

On Tuesday, the National Association of Home Builders releases its survey for September sales. The government follows on Wednesday with data on both housing starts and existing home sales.