By early afternoon in New York, the Dow Jones was down by close to 200 points or 1.2% at 16,176, with large declines also seen in the other leading stock index benchmarks: the S&P 500 fell 1.12% and the NASDAQ 100 dropped 0.85%.
The stock market retreat was sparked by data earlier today from China showing its manufacturing sector beginning 2014 in a contractionary phase, with the Chinese manufacturing PMI slipping below the 50-mark that denotes the difference between growth and shrinkage in the mid-month ‘flash’ reading for January.
The effect of this news has been exacerbated by a similarly disappointing result from the flash PMI for the US manufacturing sector, which softened to a level of 53.7 in January from 54.4 for the equivalent reading last month.
Corporate quarterly reporting continues to be a mixed bag, with earnings growth tempered by some high profile disappointments on the revenue front, including McDonald’s today which announced weaker than expected sales for its fourth quarter.
Jobless claims for last week were a solid 326,000, beating expectations, but rising 1000 from the previous week. The four-week average shows improvement and boosts hopes that January’s employment situation will show a marked improvement from December’s low base.