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NEW YORK (CNNMoney) -- U.S. stocks fell Monday after a survey of purchasing mangers showed U.S. manufacturing activity contracted in June.
The Dow Jones industrial average (INDU) was down 65 points, or 0.5%, in morning trading. The S&P 500 (SPX) fell 5 points, or 0.4%, and the Nasdaq (COMP) lost 7 points, or 0.2%.
The Institute for Supply Management said its June Purchasing Manufacturers Index fell to 49.7, down from 53.5 in May. It was the first time the index fell below 50, which signals expansion in the sector, since July 2009. Economists surveyed by Briefing.com were expecting the index to decline to 51.5.
The weaker-than-expected reading on U.S. manufacturing came after bleak readings on the euro area economy.
Eurostat, the European Union statistics office, released a report showing a new eurozone unemployment rate record of 11.1% for May, as 88,000 people were added to the jobless pool.
Separately, the Markit Economics survey of eurozone purchasing managers was unchanged in June at 45.1, marking nearly a year of decline in manufacturing activity.
The latest signs of economic weakness in the eurozone came ahead of a meeting of European Central Bank officials on Thursday. The ECB is under pressure to stimulate growth by lowering interest rates, which stand at a record low of 1%.
Last week, eurozone political leaders agreed on steps to stabilize credit markets and strengthen the region's banking system. But many of the details have yet to be finalized, and implementing the plans could prove politically difficult.
In China, the National Bureau of Statistics said Sunday that the Manufacturing Purchasing Managers Index for June fell to 50.2 from 50.4 in May. The reading was just above the 50 mark that divides expansion from contraction in the manufacturing sector.
The negative outlook of the report was bolstered by the Monday release of HSBC's monthly Purchasing Managers' Index, which fell in June and showed the second quarter ended with the lowest value since the start of 2009.
Investors are keeping a close eye on Chinese manufacturing, given concerns about the country's slowing growth.
In the United States, Wednesday marks the 236th anniversary of the nation's independence and splits the week in half. That's sure to keep trading volume light and set the stage for choppy markets, said McGervey Wealth Management president Michael McGervey. He said any gains will be muted.
"The ongoing European debt situation, this softer landing in China, our ongoing fiscal policy dysfunction -- all this stuff is keeping our market at bay," he said.
Investors were waiting for several reports on U.S. manufacturing and construction. Later this week, the Bureau of Labor Statistics will release the jobs report for June.
Last Friday marked the end of the first half of the trading year, with all three indexes posting strong gains for the six months. The Dow rose 5.3%. The Nasdaq surged 12.5%, and the S&P added 8%.
World markets: European stocks were higher Monday. Britain's FTSE 100 (UKX) rose 0.9%, the DAX (DAX) in Germany added 1.3% and France's CAC 40 (CAC40) gained 1.3%.
Asian markets ended mixed. The Shanghai Composite (SHCOMP) ended just above breakeven, while Japan's Nikkei (N225) closed barely lower. Hong Kong markets were closed for a holiday.
Economy: Construction spending in May increased 0.7%, compared with the same month last year.
Spending was expected to have risen 0.2%, weaker than the 0.3% increase in April.
Companies: Barclays (BCS) on Monday announced the resignation of its chairman, Marcus Agius, in the scandal surrounding the bank's manipulation of interbank lending rates in 2008 and 2009. Shares of the U.K. bank were up 3%.
Shares of electronics maker Micron Technology (MU, Fortune 500) soared on news that it announced a $2.5 billion deal to buy Japanese chip maker Elpida Memory. The move secures the company a spot as a major supplier to smartphone and tablet makers, including Apple (AAPL, Fortune 500).
Continuing Monday's tech company acquisitions, Dell (DELL, Fortune 500) agreed to buy IT management software provider Quest (QSFT) for $2.4 billion. The announcement nudged Dell's shares up and Quest's shares down.
Currencies and commodities: The dollar rose against the euro and British pound but fell versus the Japanese yen.
Oil for August delivery dropped $1.18 to $83.78 a barrel.
Gold futures for August delivery fell $11 to $1,593.20 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 1.62% from 1.66% on Friday.
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