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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)

Join the discussion

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ROBERT J'S February 03 2014 at 10:24 PM

Dive Dive Dive Spend Spend Spend :(

Flag Reply +2 rate up
LOLA COPA CABANA February 03 2014 at 9:07 PM

The Stock Market is a YO..YO.. a bouncing ball.... I am used to it...

Flag Reply +6 rate up
Nick February 03 2014 at 10:53 PM

the end of the show is comming before the show even starts

Flag Reply +5 rate up
Lardaledg February 03 2014 at 6:06 PM

As i mentioned a few weeks ago,the roller coaster always gets to the top and THEN,

Flag Reply +4 rate up
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.

Flag Reply +1 rate up
stevcer February 03 2014 at 11:16 PM

the rats are jumping off the sinking ship!!!

Flag Reply +9 rate up
1 reply
Mr. Stanley stevcer February 04 2014 at 12:10 AM

jumping off with a bundle of money they got as stocks rose ....

Flag Reply 0 rate up
wasabimon February 03 2014 at 8:57 PM

what a GREAT day................love to see this

Flag Reply +3 rate up
maa2626 February 03 2014 at 11:20 PM

Oh almost forgot, every dollar the feds spend, 40 cents is borrowed.

Flag Reply +11 rate up
1 reply
vlady1000 maa2626 February 03 2014 at 11:23 PM

But it is borrowed from you and me (and our kids/grandkids).........same as "free money" (to them, for now)

Flag Reply +5 rate up
1 reply
maa2626 vlady1000 February 03 2014 at 11:29 PM

I am pretty sure I am right on this but 60 cents from actual taxpayers, 40 cents is borrowed from china, japan, saudi, etc, our kids and grandkids, you are correct, will be responsible for for money the feds/govt borrows.

Flag +6 rate up
dlbcjs February 03 2014 at 8:55 PM

How things have changed. The Dow average since inception was over 10% in 2000, and long term bonds yielded a virtually safe 3 to 4%. Over the last dozen years or so, the Dow has averaged a little over 5% and bonds have dropped to 2 -3% at best. As a couple of folks have mentoned, it's almost a house of cards/crap shoot. Sad that we're going through all this, so will keep my fingures crossed and BTW, am not blaming either political party per se' -- I'm blaming BOTH of them !!!

Flag Reply +3 rate up
1 reply
Richard dlbcjs February 03 2014 at 9:37 PM

With a stymied congress maybe Obama can, to the extent that he doesn't encroach on the act of legislation, enact executive orders to move the nation forward. Otherwise, maybe the 2014 congressional elections will lead to an improvement in congressional productivity.

Flag Reply +2 rate up
Big John February 03 2014 at 5:54 PM

No more free money from old Ben. You big corporations have to really produce it yourselves now.

Flag Reply +10 rate up
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