US stocks slide in early afternoon trading
Worries about sluggish growth in the world's two largest economies drove U.S. stocks lower Monday, and added to losses racked up by the market in January.
KEEPING SCORE: The Dow Jones industrial average was down 266 points, or 1.7 percent, to 15,432 as of 1:31 p.m. Eastern time. It fell as much as 285 points. The Standard & Poor's 500 index lost 34 points, or 2 percent, to 1,747. The Nasdaq composite dropped 103 points, or 2.5 percent, to 4,001.
MONDAY TUMBLE: Stocks opened lower after earlier declines in European and Japanese indexes. The sell-off accelerated in the U.S. after a private survey showed U.S. manufacturing barely expanded last month as cold weather delayed shipments of raw materials and caused some factories to shut down. There were other signs of weakness in the world's largest economy. Construction spending rose modestly in December, slowing from healthy gains a month earlier.
GLOBAL CONCERNS: The report of sluggish U.S. manufacturing growth added to concerns about the global economy. Investors were unnerved by an earlier official Chinese manufacturing survey that showed factory output grew at a slower rate in January compared with December in the world's second-biggest economy. The report released on the weekend followed an HSBC survey that showed an outright contraction in manufacturing.
WINTER BLUES: A rough first day of trading in February extends January's stock-market stumble. Concerns about the global economy, U.S. company earnings, as well as turmoil in emerging markets, led the Dow to its worst January since 2009. The index slid 5.3 percent while the S&P 500 index fell 3.6 percent.
Investors are watching to see whether the market's performance worsens into what some say is an overdue correction in the market, or a drop of 10 percent.
"There's been a pretty significant change in sentiment for the market," says Erik Davidson, deputy chief investment officer for Wells Fargo Private Bank. "We're down now more than 5 percent from the highs we reached at the end of last year. So that's something a lot of people will be watching."
SPINNING OUT: Ford shares slipped 49 cents, or 3.3 percent, to $14.46 and General Motors shares fell 89 cents, or 2.5 percent, to $35.19 after the automakers reported a drop in U.S. January sales, hurt by harsh weather that kept customers away from dealerships. GM sales fell 12 percent, while Ford said sales fell 7 percent. Chrysler bucked the trend with U.S. sales gains of 8 percent. Still, analysts expect U.S. auto sales to reach more than 16 million this year - a return to pre-recession levels.
WEAK SIGNAL: All 10 sectors in the S&P 500 index fell, and telecommunications stocks posted the biggest declines, weighed down by AT&T and Verizon Communications. Verizon slid $1.54, or 3 percent, to $46.48. AT&T fell $1.23, or 3.7 percent, to $32.09. The stock is down more than 8 percent this year. The company began offering reduced cellphone rates over the weekend for family plans with large amounts of data. AT&T hopes customers will upgrade from lower-use plans.
HEALTHY SELL-OFF: "The selling is an extension of last week's activity," says Frank Davis, director of trading at LEK Securities. "It looks like a healthy sell-off."
Davis anticipates that the sell-off will continue, especially since most of the economic data coming out in the next few weeks is data could have been negatively affected by the severe winter weather in the U.S.
TOY STORY: Mattel fell $1.95, or 5 percent, to $35.89. The world's largest maker of toys reported on Friday that sales of Barbie and Fisher-Price preschool items dropped in its fourth quarter.
DEAL DOUBTS: Jos. A Bank Clothiers fell $2.40, or 4.3 percent, to $53.82 in afternoon trading on continued doubts that a takeover bid by rival clothier Men's Wearhouse will go through. The two retailers have been dueling since October when Jos. A. Bank offered $2.3 billion for Men's Wearhouse.
DRUG BOOST: Some stocks posted gains. Pfizer rose 38 cents, or 1.2 percent, to $30.78, after the company reported that a mid-stage study of an experimental drug for advanced breast cancer met the main goals. The drug is seen as a potential huge seller. Pfizer was the only stock to rise among the 30 members of the Dow.
SAFETY DANCE: Facing lower stocks and global jitters, investors moved into the relative safety of U.S. government bonds. Bond prices rose, and the yield on the U.S. 10-year Treasury note fell to 2.59 percent from 2.65 percent on Friday. The 10-year has had a dramatic move in the last two weeks. In mid-January, the 10-year note was trading at a yield around 2.9 percent.
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