Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The major indexes are down after mixed reports from the services and manufacturing sectors. As of 1:30 p.m. EST, the Dow was dropped 37 points to 16,432. The S&P 500 (SNPINDEX:^GSPC) dropped five points to 1,826.

There were two U.S. economic releases today.





ISM nonmanufacturing index




Factory orders




The gain in factory orders was expected, as numerous other recently released measures of the manufacturing sector have shown growth in November. The one to pay attention to today is the unexpected drop in the Institute for Supply Management's nonmanufacturing index. A level above 50 indicates economic expansion while a reading below 50 indicates contraction.

Analysts had expected the index to rise to 55%, but it instead fell to 53%. That indicated continued growth but a slowdown from November.

Source: Institute for Supply Management.

The index was pulled down by a 7 percentage point drop in the new orders component, from 56.4% to 49.4%. This is the first contraction in new orders since July 2009. New orders were up in just six industries (management of companies and support services; retail trade; information; public administration; construction; and finance and insurance) and were down in the 11 other industries the Institute for Supply Management tracks. New export orders saw a similar 6.5 percentage point drop but remained growing at a reading of 51.5. New export orders are not as reliable as the overall number, as 65% of respondents said they do not separately measure orders for exports.

The final large mover was a 6 percentage point drop in the ISM's nonmanufacturing inventories index. Inventories fell from 54% in November to 48% last month, indicating contraction. This was the inventories index's first contraction in 10 months. Contraction means the services sector is using up inventory and not replenishing it, which was to be expected somewhat after the large seasonally adjusted inventory build we saw in the third quarter.

Overall, the ISM nonmanufacturing index is still showing solid growth, but investors should keep their eye on the report to see if new orders continue to contract. Slowdown in that index would be worrisome at a time when there are multiple risks to the economy, including rising interest rates, slowing activity in China, and high oil prices.