First it was the jobless recovery. Now it seems like the joyless recovery. Despite gains in personal incomes and spending for March, the US stock market sagged Monday.

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The Dow Jones Industrial Average spent the morning in negative terrain, compared with Friday’s close, and that’s part of a broader trend.

After rising in this year’s early weeks, the widely watched Dow index has been treading water since February, a little below or above the 13000 level.

What’s holding back investor spirits?

Corporate profits, after all, have reached historically high levels, yet the Dow’s level of about 13200 Monday remains well below the pre-recession peak (about 700 points above that).

Two factors appear to be important:

• America’s economic momentum, embodied in the news about consumer incomes and spending, is still tepid.
• The US is currently the patch of green in a global landscape characterized by the economic equivalent of a drought in Europe and storm threats in China and Iran.

Here’s what the Commerce Department reported: Personal income in the US rose 0.4 percent in March, and spending rose by a similar amount, 0.3 percent. Not racing forward, especially when inflation is taken into account, but those are steps of progress.

“The good news in this report is the strength in income,” said IHS Global Insight economist Leslie Levesque in a written analysis. “For the first time this year, growth in income … was in positive territory” even after adjusting for inflation and taxes.

Consumer spending, also rising faster than inflation in the government’s report for March, represents the vital bulwark of economic growth. When incomes are rising and consumers spend, business tend to increase hiring.

Monday’s news confirms the impression left on financial markets last week, when the government’s estimate of first-quarter economic growth came in weaker than expected. The report showed gross domestic product (GDP) rising at a 2.2 percent annual pace, with the gains largely fueled by domestic consumption.  (Business investment is also rising, while changes in government consumption and foreign trade subtracted from the growth rate.)

Overall, economists see welcome signs of a recovery that has solid footing in the US. The woes in the housing market are starting to fade, and private sector employers have been adding jobs each month, contributing to the gains in consumer income. Many forecasters see the economy growing at a similar pace in the current quarter.

To some extent, consumers are showing a happier mood, although not exuberance.

“Consumer sentiment has clearly improved somewhat in recent months, aided by steadily the improving job market and better economic news flow,” economist Chris Williamson of the financial-data firm Markit said in an analysis of the GDP numbers Friday.

But judging by the stock market, investors have an eye on the risks as well as the progress.

In the US, they don’t see a lot of room for positive surprises. The personal income and spending report, for example, showed that US consumers have been saving less of their income in recent months. With the savings rate at 3.8 percent of disposable income in March, household savings don’t look as healthy as last year’s level of 4.7 percent.

After a post-recession rebound, gains in corporate profits may be modest in coming quarters, which could explain the lackluster performance of the Dow and other stock indexes.

Global forces also weigh on the economic outlook. Investors responded Monday to news that Spain’s economy is in recession, reporting two straight quarters of decline in GDP. That news points to broader worries about how weakness in Europe will affect the global economy.

Other danger spots include the risk of a further spike in oil prices if tension surrounding Iran’s nuclear program intensifies, and the risk that China’s cooling economy could have a “hard landing.”

For now, IHS Global Insight expects China and the US to muddle through and lead the world economy higher. The firm’s forecast for global GDP growth is 2.8 percent for 2012, and 3.6 percent in 2013.

FOX Business: The Power to Prosper

Stock-index futures followed European markets deep into the red on Monday as traders fretted about political developments that threaten to derail progress on fighting Europe’s debt crisis and weak economic data.

Today’s Markets

As of 8:18 a.m. ET, Dow Jones Industrial Average futures fell 135 points to 12853, S&P 500 futures dipped 14.9 points to 1360 and Nasdaq 100 futures dropped 24 points to 2650.

Market participants had a slew of headlines from across the globe to digest to kick off what may be a busy trading week. 

Markit’s eurozone PMI gauge suggested the 17-member currency bloc’s economic output contracted at the swiftest pace in five months in April. The measure came in at 47.4, down from 49.1 in March. Readings above 50 point to expansion, while those below indicate contraction. 

Germany, Europe’s powerhouse economy, saw activity in its important manufacturing sector contract at a the swiftest pace in 33 months. Meanwhile, France’s key service-sector activity slumped to a six-month low. 

“Germany’s economy continued to rest on a knife edge of recession in April, with modest service sector growth only just counterbalancing the escalating manufacturing downturn,” Tim Moore, a senior economist at Markit said in a note accompanying the data. 

Also on the European front, talks aimed at bringing the Netherlands’ deficit in-line with a fiscal compact agreed to by all members of the eurozone broke down, threatening to force the resignation of Prime Minister Mark Rutte, according to multiple news reports. 

The developments in the Netherlands “not only threatens early elections in the Netherlands, but also poses a significant threat to the effective ratification of the fiscal compact, the central plank in (German) Chancellor Merkel’s strategy for addressing the eurozone crisis,” analysts at Nomura wrote in a note to clients. 

French President Nicolas Sarkozy came in second to Socialist candidate François Hollande in a preliminary election contest. Sarkozy is a major part of the eurozone’s drive to enforce tough austerity measures in its bid to fight the debt crisis. As a result, analysts said a loss by Sarkozy could be destabilizing. 

In Asia, another PMI survey by HSBC showed China’s manufacturing sector contracted at a slower rate in April from the month prior. 

There are also a slew of corporate earnings on tap for this week, with 176 companies set to report. 

ConocoPhillips (COP) reported weaker-than-expected adjusted quarterly profit, knocking sales lower. Kellogg (K) also posted a disappointing quarterly profit, and pared back its full-year outlook. 

Commodities were to the downside. Crude oil traded in New York sold off by $1.12, or 1.1%, to $102.75 a barrel. Wholesale New York harbor gasoline dipped 0.57% to $3.12 a gallon. 

In metals, gold fell $12.70, or 0.8%, to $1,630 a troy ounce. 

Foreign Markets

European markets tumbled 2.2%, the English FTSE 100 fell 1.6% to 5680 and the German DAX sold off by 2.7% to 6570. 

In Asia, the Japanese Nikkei 225 slipped 0.2% to 9542 and the Chinese Hang Seng dropped 0.79% to 20624.

An optimistic survey on the German economy lifted stocks across Europe on Friday at the end of a week that was overshadowed by worries over Spain’s finances.

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The Ifo institute business-climate index for Europe’s largest economy edged up to 109.9 points in April from 109.8 in March — the sixth straight increase. Growth in Germany could help weaker nations in the 17-country eurozone as demand for their goods increases.

“This is strong empirical evidence that the recovery of the global economy continued in the last few weeks,” analysts at UniCredit wrote in a note. “More optimistic German exporters and a global economy losing momentum simply do not jibe!”

The German optimism was backed up by strong retail sales in the U.K., which grew 1.8 percent in March compared with February.

Investors concerned over whether the eurozone will fall back into disarray were also keeping an eye on a meeting of the Group of 20 leading economies in Washington, where finance chiefs were expected to boost the resources of the International Monetary Fund. The IMF wants to have a larger crisis arsenal to help ailing economies should the financial crisis intensify again.

Ahead of the meeting in Washington, stocks rose across Europe. Britain’s FTSE 100 inched up 0.3 percent to 5,761.4. Germany’s DAX jumped 1 percent to 6,738.6 and the CAC-40 in Paris gained 0.6 percent to 3,191.2.

Wall Street also appeared headed for a higher opening after relatively strong earnings from corporate giants such as Schlumberger Ltd., which saw a strong rise in profits, and General Electric Co., whose earnings dropped less than analysts had expected. Earnings the day before from Morgan Stanley, eBay, Southwest Airlines and Bank of America were better than expected.

Dow Jones industrial futures rose 0.5 percent to 12,965 and S&P 500 futures were also 0.5 percent higher at 1,378.7.

Earlier in the day, market sentiment had been weighed down by lackluster U.S. economic data, pulling down markets in most of Asia.

Tokyo’s Nikkei 225 index dropped 0.3 percent to close at 9,561.36. South Korea’s Kospi lost 1.3 percent to 1,974.65, with the government saying that exports are likely to face headwinds in the second quarter due to Europe’s debt crisis and China’s slowdown.

Benchmarks in Singapore, Taiwan, India and New Zealand also fell. Australia’s S&P/ASX 200 closed marginally higher at 4,366.50.

Shares in Hong Kong and mainland China, meanwhile, rose amid expectations that Beijing will soon lower the ratio of deposits that banks are required to hold in reserve — a move that would boost lending. Hong Kong’s Hang Seng rose less than 0.1 percent to 21,010.64 and the Shanghai Composite Index gained 1.2 percent to 2,406.86. The smaller Shenzhen Composite Index gained 0.8 percent to 961.77.

Despite the hedged optimism on European markets going into the weekend, concerns over some of the continent’s largest economies — Italy and Spain — is far from over.

The yield, or interest rate, on Spanish 10-year bonds was hovering just below 6 percent at 5.92 percent as the country’s government was meeting to approve an extra €10 billion in budget cuts and charges. The yield on the Italian equivalents was also up at 5.63 percent.

Italy and Spain, the eurozone’s No.3 and 4 economies, are generally seen as too big to bail out — limiting the options of the currency union which has already spent billions rescuing Greece, Ireland and Portugal. Analysts are speculating that the eurozone may provide targeted help for Spain’s struggling banks if the situation deteriorates further, but many fear that limited intervention could quickly open up much larger needs as private investors take fright.

On Monday, the European Union’s statistics office will release its figures for 2011 government deficits in the 27-country block. Spain’s deficit, which came in at 8.5 percent of economic output according to the Spanish government, will be under close scrutiny with investors eager to see the reasons for the unexpectedly high financial shortfall.

In energy trading, benchmark oil for May delivery was up 79 cents at $103.06 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell by 40 cents to end at $102.27 per barrel on the Nymex on Thursday.

The euro rose 0.35 percent to $1.318 from $1.3130. The dollar rose 0.15 percent to 81.72 yen from 81.46 yen.