August is the third month in a row that saw contraction in manufacturing, which has raised eyebrows of financial analysts during the first day of the Democratic Party Convention in Charlotte, according to a Reuters report
Adding to concerns about the economy were separate reports that show construction spending in July fell by the most in a year.
The reports indicate private and public sectors cut back on inventing, which dims outlook for an increase in economic activity in the third quarter.
Separate data also showed construction spending in July fell by the most in a year as both the private and public sectors cut back on investment, according to a report that could dampen hopes of a pick-up in economic activity
in the third quarter.
Stocks reflected the disappointing economic reports early Tuesday. The Dow Jones industrial average .DJI dropped 78.79 points, or 0.60 percent, to 13,012.05. The Standard & Poor's 500 Index .SPX fell 7.15 points, or 0.51 percent, to 1,399.43. The Nasdaq Composite Index .IXIC lost 13.56 points, or 0.44 percent, to 3,053.41.
The payrolls report, another leading economic indicator, comes out Friday, a day after the DNC is over, and will also be closely watched.