Worries about mounting credit woes and the slowing U.S. economyhave been weighing on investors around the world.

But stocks in the United States, after opening sharply lower, have recovered despite fresh signs of economic weakness.

The Institute for Supply Management said its index of manufacturing activity declined in February to 48.3 percent  from 50.7 percent in January. A reading below 50 indicates a contraction.

The Commerce Department reported that construction spending slumped 1.7 percent, to at a seasonally adjusted annual rate of $1,121.5 billion, the biggest drop since January 1994.

Crude oil prices, meanwhile,climbed, rising as high as $103.95 a barrel, topping the 1980 inflation-adjusted record for oil.

But stocks had a muted reaction, with the Dow Jones industrial down only 30 points in afternoon trading. ,

On Friday, stocks slid sharply in the wake of a $5.3 billion loss from American International Group and an estimate that losses from the global credit crisis could ultimately exceed $600 billion. Asian markets followed suit today, with Tokyo tumbling 4.5 percent.

One of the largest banks in the world, HSBC of Britain, underscored those worries about credit, even while reporting strong earnings. The bank said earnings climbed 10 percent for the year while loan losses grew to $17.2 billion, almost entirely from its U.S. lending business, the former Household Financial.

"The medium term is very difficult to predict as there are a lot of unanswered questions around banks' balance sheets," Thierry Lacraz, a strategist at Swiss bank Pictet, told the BBC.

Today, the leading group of business economists pointed to the risks of rising mortgage defaults and growing debt.

Members of the National Association for Business Economists "are increasingly concerned over the short-term risks associated with subprime mortgages and other forms of indebtedness, while they continue to cast a wary eye on inflation," said Ellen Hughes-Cromwick, the association's president.

While the N.A.B.E., the accepted arbiter of such things, has yet to call the economy in a recession, Warren Buffett has, saying in an interview on CNBC this morning that "by any commonsense definition, we are in a recession." 

American investors will be looking closely at this morning's release of the latest survey from the Institute of Supply Management. The manufacturing benchmark is expected to show a contraction for February.