nb_cid nb_clickOther -tt-nb this.style.behavior='url(#default#homepage)';this.setHomePage('http://www.aol.com/?mtmhp=acm50ieupgradebanner_112313 network-banner-empty upgradeBanner
14
AOL.com
AOL.com
AOL Mail
AOL Mail
Video
Video
AOL Favorites
Favorites
AOL.com

S&P posts biggest daily percentage decline since June

Wall Street

(Reuters) - U.S. stocks slumped on Monday, with the S&P 500 suffering its worst drop since June, after weaker-than-expected data on the factory sector in the world's largest economyprovided investors with the latest reason to move away from riskier assets.

U.S. manufacturing grew at a slower pace in January as new order growth plunged by the most in 33 years, while spending onconstruction projects barely rose in December.

Investor sentiment soured sharply after the factory data, driving the cost of protection against a drop on the S&P to its highest level in nearly four months. The CBOE volatility index .VIX jumped 16.5 percent to 21.44, its highest level since December 2012.

S&P e-mini futures showed 2.999 million contracts traded for the session, the largest volume since February 25, 2013.

"Nothing is preserved today - once the market started selling off, that was that," said Keith Bliss, senior vice-president at Cuttone & Co in New York.

The Dow Jones industrial average .DJI fell 326.05 points or 2.08 percent, to 15,372.8, the S&P 500 .SPX lost 40.7 points or 2.28 percent, to 1,741.89 and the Nasdaq Composite .IXICdropped 106.919 points or 2.61 percent, to 3,996.958.

The Dow closed below its 200-day moving average for the first time since December 28, 2012, a technical breakdown which could indicate further declines.

Selling was broad-based, with only nine components in the S&P 500 trading in positive territory. Telecoms .SPLRCL, down 3.7 percent, and consumer discretionary .SPLRCD, down 2.7 percent, were among the worst performing sectors.

The Dow Jones Transportation average .DJT dropped 3.2 percent.

Stocks have been pressured as the Federal Reserve confirmed its commitment to withdrawing its market-friendly stimulus and by concern about growth in China. China's service-sector growth slowed to a five-year low in another sign of stuttering momentum in the world's second-largest economy.

Investors have also become leery about the outlook for emerging markets, where a recent rout in currencies spurred some central banks to raise interest rates or intervene in markets to limit the swings. That, in turn, has pressured bond and stock holdings and forced investors to exit in favor of assets perceived as relatively safe, like the yen and Swiss franc.

"This is the best evidence yet, to me, that people knew the Fed's monetary policy in 2013 was doing nothing but providing a definite floor to the equity markets. As soon as they started signaling they were going to pull out of their extraordinary stimulus you saw the unintended consequences," said Bliss.

For January, the Dow tumbled 5.3 percent and the S&P 500 slid 3.6 percent - their worst monthly percentage declines since May 2012.

With earnings season halfway over, Thomson Reuters data shows that of the 250 companies in the S&P 500 index that have reported earnings, 69.7 percent have topped expectations, above both the 63 percent beat rate since 1994 and the 67 percent rate for the past four quarters.

Telecoms were weaker on speculation AT&T Inc's (T.N) plan to cut prices on its large shared data plans could prompt other U.S. carriers, particularly larger rival Verizon Wireless (VZ.N), to offer new discounts. AT&T lost 4.1 percent to $31.95 and Verizon lost 3.4 percent to $46.41.

Charter Communications Inc (CHTR.O) is discussing raising its bid for Time Warner Cable Inc (TWC.N), according to people familiar with the matter, a move that could pressure its reluctant rival ahead of a proxy deadline. TWC shares added 0.5 percent to $134.01.

Britain's Smith & Nephew (SN.L) is to buy ArthroCare Corp (ARTC.O) for $1.7 billion in cash to strengthen its treatments for sports injuries, an area growing faster than its main replacement hips and knees business. ArthroCare shares rose 8.2 percent to $49.12.

Pfizer's (PFE.N) shares edged up 0.7 percent to $30.60, the only Dow stock to close higher. Pfizer's experimental breast cancer drug significantly delayed progression of symptoms in a mid-stage trial, meeting the study's primary goal.

Volume was heavy, with about 9.46 billion shares traded on U.S. exchanges, well above the 6.94 billion average in January, according to data from BATS Global Markets. Volume was 8.84 billion on January 24, the last session the S&P 500 fell more than 2 percent.

Declining stocks outnumbered advancing ones on the NYSE by 2,610 to 463, while on the Nasdaq, decliners beat advancers 2,286 to 368.

(Reporting by Chuck Mikolajczak; Editing by Nick Zieminski)

More From You

622 Comments
*0 / 3000 Character Maximum
Filter by:
Dave February 04 2014 at 10:30 AM

The artificial infusion of stimulus money from the federal government, is coming home to roost. Obama and his policies have really failed.

Reply Flag as Abusive +1 rate up rate down
fernandezarthr February 04 2014 at 10:00 AM

........In other words, and this is for the regular people out there..........It's all been a big lie..........the so called great Economy is just ,an inflated number, make to look good for the benefit of some..........the reality is that the market was Not...... is Not..... what they say it was/ it is!..............we are in "muddy' waters!...........Obamanomics is going to take US all down!.....

Reply Flag as Abusive rate up rate down
chuck February 04 2014 at 9:53 AM

bet oboma is cheering

Reply Flag as Abusive rate up rate down
ddstan1120 February 04 2014 at 9:23 AM

Once the federal reserve said that they were cutting back on printing more monoply money in order to bolster the market, the downturn was inevitable.
The brokers knew that this was coming, but kept selling. Now, it is the small investor that is going to get it in the neck.

Reply Flag as Abusive +2 rate up rate down
Ron Lewis February 04 2014 at 9:16 AM

This may be the beginning of an expected correction, perhaps trending toward a 10% short-term decline in equities. The market is rather fairly priced, although the much higher than usual (over the past ten years) P/Es are bothersome. Follow Mr. Buffett's advice. The "blue light" is on and will be for a little while. Don't subscribe to "buy high/sell low". That's not the way to grow your portfolio value. Adjust, rebalance, follow your plan.

Reply Flag as Abusive +3 rate up rate down
1 reply to Ron Lewis's comment
BroPower February 04 2014 at 9:22 AM

Thanks for a rational comment.

Reply Flag as Abusive +3 rate up rate down
cardinalmick February 04 2014 at 9:16 AM

Thom Hartmann maybe right, "The Crash of 2016", starting much sooner. What can you expect on a false economy where there are no concrete growth in jobs or income. It scares me that my retirement plans are in their hands. Can you actually believe anything these companies say? I think they say things to keep the "professional gamblers" on Wall Street happy and hungry for more. The speculations and derivatives are now over $700 billion and climbing. When the crash of 08, the derivatives was over $800 billion. In 09, the derivatives fell to $300 billion. See a connection. Keep your eyes wide open and prepare for another crash.

Reply Flag as Abusive +2 rate up rate down
Beautiful February 04 2014 at 9:15 AM

I have been paralyzed with fear of losing my money ever since the tech wreck of 1999-2000.
Every time I think of seriously jumping back into the market....it takes a dump and frightens me away.
What can I invest in?

Reply Flag as Abusive rate up rate down
greatbirdusa February 04 2014 at 9:09 AM

Don't know how you are doing but my retirement funds just dropped
back to what it was in October 2012 and who knows when the bottom will hit.
All those Liberals bragging about Obama's stock market gains have gone silent.
Where's the bragging now sheep..?

Reply Flag as Abusive +3 rate up rate down
1 reply to greatbirdusa's comment
Leonard February 04 2014 at 9:13 AM

he took over at 8000, hold on if we are going back to that

Reply Flag as Abusive rate up rate down
ourleads February 04 2014 at 9:04 AM

Like the housing bubble, Bernanke's stock market bubble, also inflated with cheap money, is now deflating. Take your profits while you can. Remember, you have no profit until you sell.

Reply Flag as Abusive +4 rate up rate down
Davie2743 February 04 2014 at 9:04 AM

If you asked most of these traders six months from now why they sold so many of their equities I bet they would not be able to tell you why, in other words they follow the leader a behavior learned in childhood playground.

Reply Flag as Abusive rate up rate down
~~ 2592000

Voting...

More From Our Partners