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Reports contributed to Wall Street’s downturn
U.S. manufacturing barely expanded last month, in part because cold weather delayed shipments of raw materials and caused some factories to shut down, according to the Institute for Supply Management, a trade group of purchasing managers.
The ISM said Monday that its index of manufacturing activity fell to 51.3 in January from 56.5 in December. It was the lowest reading since May, though any reading above 50 signals growth. Also Monday the Commerce Department said U.S. construction spending rose modestly in December, slowing from healthy gains a month earlier.
The department said construction spending increased a scant 0.1 percent to a seasonally adjusted annual rate of $930.5 billion, down from a revised 0.8 percent increase in November.
– Associated Press
Associated Press
Stocks fell sharply Monday, with the Dow losing 326 points on the day. The decline was precipitated by falling markets in Europe and Asia, then hastened by a series of disappointing data. The Dow is now down 7 percent for the year.

Dow plummets as worries soar

For investors, February is starting out just as rough as January.

U.S. stocks tumbled on Monday, pushing the Dow Jones industrial average down more than 320 points after reports of sluggish U.S growth added to investor worries about the global economy. The slump follows the Dow’s worst January performance since 2009.

The market stumbled from the get-go, with U.S. markets opening lower after declines in European and Japanese indexes. Then it quickly turned into a slide as a spate of discouraging economic data on everything from manufacturing to auto sales to construction spending poured in.

By late afternoon, the sell-off accelerated further, bringing the Dow down more than 7 percent for the year. The S&P 500 index was down more than 5 percent on the year.

Some stock watchers took the market’s decline in stride. They considered it a necessary recalibration following the market’s record highs at the end of last year.

“It’s a bit painful for investors to see the equities markets drop as they have, but this is healthy for this market,” said Chris Gaffney, a senior market strategist at EverBank. “We’ve been almost 2 1/2 years without a 10 percent correction. So we’re still in that healthy correction, if you will.”

All told, the Dow tumbled 326.05 points, or 2.1 percent, to 15,372.80. It fell as much as 342 points earlier in the afternoon. The Standard & Poor’s 500 index lost 40.70 points, or 2.3 percent, to 1,741.89. The Nasdaq composite dropped 106.92 points, or 2.6 percent, to 3,996.96.

There were signs of worry throughout the market. The VIX index, a measure of stock market volatility, rose to its highest level since December 2012. Investors shifted into U.S. government bonds, pushing yields lower and continuing their sharp decline since the start of the year.

Staffing company Robert Half International fell the most among stocks in the S&P 500 index. CarMax and Pfizer were among the few stocks to eke out gains on the day. Cold U.S. weather emerged as common problem for the economy last month.

Investors were discouraged Monday by a private survey showing U.S. manufacturing barely expanded last month. Construction spending rose modestly in December, slowing from healthy gains a month earlier.

Automakers also piled on the disappointing news.

Ford shares slipped 41 cents, or 2.7 percent, to $14.55 and General Motors shares fell 83 cents, or 2.3 percent, to $35.25 after the automakers reported a drop in U.S. January sales, hurt by harsh weather that kept customers away from dealerships.

“Investors had expectations going into 2014 of a much stronger U.S. economic recovery than actually what we’re seeing and we’ve had to reset our expectations,” Gaffney said.

Fresh signs of weakness in China also weighed on the minds of investors.

An official Chinese manufacturing survey released over the weekend showed factory output grew at a slower rate in January compared with December.

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