By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks deepened losses on Monday
after a weaker-than-expected reading on manufacturing data added to
the downbeat mood, with investors already shaken by concerns over a
slowdown in China.
U.S. manufacturers expanded in January at the slowest rate in
eight months as the pace of new orders sharply decelerated,
according to the closely followed ISM index. The Institute for
Supply Management index sank to 51.3% from 56.5% in December.
That's the lowest level since last May. Economists surveyed by
MarketWatch had expected the index to drop to 56%. Read: How
reliable are ISM reports?
The S&P 500 index (SPX) was down 27 points, or 1.5%, at
1,755.29, falling below the key level resistance level of 1,775.
Market technicians watch this level closely, as closing below it
would trigger heavy selling by algorithmic programs, which comprise
about 40% of the market.
The Dow Jones Industrial Average (DJI) fell 216.65 points, or
1.4%, to 15,484.48. The Nasdaq Composite (RIXF) shed 73.40 points,
or 1.8%, to 4,030.54. Follow our stock market live blog.
"The headline numbers from the ISM data were much weaker than
expected and it would be interesting to see just how much of it is
due to bad weather," said Quincy Krosby, market strategist at
Prudential Financial.
"Investors will be watching the employment data on Friday very
keenly, to see if there is a confirmation that we are somehow
entering a soft patch. As the Fed continues with the tapering, the
markets once again react to bad news negatively and are
recalibrating valuations to economic data and earnings," Krosby
said.
The main indexes ended January with the steepest losses in more
than a year, as disappointing data from China, which triggered
selloffs in emerging-markets currencies over the past two weeks,
and worries over deflation in the euro zone forced investors to
flee equity markets and seek safer assets.
The implied volatility as measured by the CBOE Vix index, which
moves inversely to the S&P 500, jumped 8.8% to nearly 20, the
level not seen since October.
Less-than-stellar earnings results from corporations did little
to alleviate fears among investors.
Shares of Jos. A. Bank Clothiers Inc. (JOSB) fell 3.7% after The
Wall Street Journal reported Sunday that the company is in talks to
buy fellow apparel retailer Eddie Bauer, citing sources. Jos. A.
Bank and Men's Wearhouse Inc. (MW) have been locked in a monthslong
battle to buy each other out. Shares in Men's Wearhouse slid
6.2%.
Herbalife Ltd. (HLF) shares initially rose after the company
said it plans to offer $1 billion of convertible notes and use the
proceeds to buy back shares. However, shares fell 2.4%.
Ford Motor Co. (F) shares fell 3.1% after the car maker reported
a 7% drop in January sales. General Motors Co. (GM.XX) reported
that its U.S. sales in January fell 12%, more than expected by
analysts. The stock fell 1%.
In other markets, the Nikkei Stock Average fell 2.4%, putting it
in a technical correction as it closed at 14,619.13, which is just
10% off from a Dec. 30 high of 16,291.
European stocks markets moved lower on Monday, mirroring a
negative mood in Asia, after Chinese manufacturing data added to
fears about a slowdown in the world's second-largest economy. The
dollar (DXY) was mostly lower, and oil was flat, while gold (GCH4)
rose.
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