Stocks pare losses after services data

NEW YORK — Stocks are lower but off their worst levels following a trade group report that the U.S. service sector contracted less than expected in June.

Stocks had opened lower Monday on jitters about how quickly the economy can recover.

The Institute for Supply Management’s services index rose to 47 in June from 44 in May. Economists polled by Thomson Reuters had expected a reading of 45.5. It is the highest level in nine months.

The Dow Jones industrial average is down 31 at 8,250. The broader Standard & Poor’s 500 index is down 4 at 892. The Nasdaq composite index is down 13 at 1,784.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

NEW YORK (AP) — Investors retreated again Monday as investors around the world grow pessimistic about how quickly the economy’s can recover.

Following the lead of stock markets around the world, investors took their cues from the tumbling price of oil. Oil hovered around $64 a barrel on the growing belief that the economy won’t be strong enough to lift demand as much as expected.

Oil had been steadily rising in recent months on growing expectations that the economy was going to be stronger, therefore pushing demand higher.

Last week, oil hit an eight-month high above $73 a barrel. But there have been creeping signs recently that the economy was not as robust as investors hoped. And last week’s weaker than expected reading on consumer confidence and the Labor Department’s report of larger than expected job losses intensified investors’ doubts about a recovery.

A barrel of crude traded at $64.01, down $2.72 a barrel on the New York Mercantile Exchange.

In the first half-hour of trading, the Dow Jones industrial average fell 26.30, or 0.3 percent, to 8,254.44. The broader Standard & Poor’s 500 index fell 4.06, or 0.5 percent, to 892.36. The Nasdaq composite index fell 8.27, or 0.5 percent, to 1,788.25.

Overseas markets also fell.

U.S. markets are catching up after being closed Friday for the July Fourth holiday. On Thursday, stocks fell sharply in response to the Labor Department employment numbers. The major indexes all dropped more than 2 percent.

Investors will get a reading on the U.S. service sector.

They are also awaiting the start of second-quarter earnings reports. They’re hoping to see whether companies’ results and their forecasts for the rest of the year yield clues about the economy. U.S. aluminum giant Alcoa Inc. opens earnings season on Wednesday.