Economic activity in the U.S. manufacturing sector failed to grow for the first time in 10 months, according to the Institute for Supply Management. Its key purchasing managers' index for manufacturing fell to 47.7% in December from 50.8 in November. The employment portion of the index improved 48.0 in December from 47.8 in November, but that still remained below the growth rate.

"The recent trend has been toward slower growth," said Norbert Ore, chair of the institute's manufacturing business survey committee. "However, December was apparently a very tough month as new orders, production, and employment were all below the break-even mark of 50%. Industries close to the housing market appear to be struggling more than others, and those involved in exports seem to be doing better. Slower demand appears to be more of a problem than excessive inventories based on the respondents' comment."