ISM manufacturing gauge falls to two-year low (50.9)

U.S. manufacturing activity barely grew in July, according to a key index released Monday in a demonstration of an economy struggling to expand.

The Institute for Supply Management’s manufacturing gauge in July dropped 4.4 points to 50.9%, the worst reading since July 2009 and barely staying above the 50% no-change line.

The index came in far below a MarketWatch-compiled economist poll of 54.3%. U.S. stocks slumped after the ISM report, with the Dow industrials DJIA -0.32% recently down by 35 points. Yields on 10-year Treasury bonds fell to their lowest level since November.

Since April, the ISM index has slumped 9.5 points, the worst three-month dip since the September-to-November 2008 period when Lehman Brothers collapsed.