Morning.
We have a lot of red on our screens to start out the day.
Dow -55 points
SPX -6 points
Nasdaq -19 points
And the Dow already has deepened its loss — last down 135 points.
The blue-chip index is on pace for its third down day in a row.
That weak Chinese manufacturing report seems to be getting most of the blame for today’s slide.
MarketWatch’s Michael Kitchen reported the following:
China’s manufacturing sector is registering an unexpected contraction in January, albeit a mild one, according to preliminary data out Thursday, though economists said the result didn’t necessarily signal a sharp slowdown.
In the Dow, Goldman is the biggest loser at -2.1%
Nike -1.6%
Coke -1.5%
McDonald’s is the only Dow component that’s up at +0.4%
In the S&P 500, Netflix is up 16% after its earnings report late Wednesday for the best performance in that index.
Read more about today’s jumpiest stocks in the Movers & Shakers column.
Peter Boockvar, chief market analyst at the Lindsey Group, says in a note today that he saw an overnight change for the worse after that Chinese manufacturing report.
He writes: “The mood of the market changed at 8:45 est time last night after China’s HSBC preliminary January manufacturing PMI fell below 50 to 49.6, a 6 month low from 50.5.”
He also says: “While there is a lot of optimism for global growth in 2014, the picture still looks muddied, especially in emerging markets which is where the real growth alpha has come from.”
Dave Lutz, Stifel’s head of ETF trading, also has a take on the Chinese data, saying in emailed comments that the data “raise concerns that the benefits from Beijing’s economic mini-stimulus last summer have faded.”
The main indexes are keeping their sizable losses after the latest batch of economic data hit at 10 a.m. Eastern.
They have trimmed their losses a little bit, but they’re still deeply in the red.
Santander Consumer USA Holdings Inc., the U.S. auto-lending unit of the Spanish bank, is starting trading on the NYSE under the ticker “SC.”
It’s up nearly 9%, according to FactSet data.
Were traders just looking for an excuse to start off the day with selling?
That’s what Andrew Wilkinson, chief market analyst at Interactive Brokers, suggests in a note today.
He writes: “Sentiment gauges in Asia and within the Eurozone moved in opposing directions on Thursday creating an excuse for investors to scream ‘sell’ at the opening bell.”
And now the main indexes have hit fresh session lows in the last few minutes.
Dow was last -167 points
SPX -17 points
Nasdaq -42 points
Here’s a handy chart showing that much-discussed PMI data.
Europe (the royal blue line) is heading in the right direction, while the lines for the U.S. and China have been trending down lately.
Like that China ETF mentioned earlier, Herbalife is also displaying quite negative action.
Sen. Edward Markey, a Democrat from Massachusetts, on Thursday called for a probe of the business practices of Herbalife, says a short article from MarketWatch’s Greg Robb.
Today’s sell-off certainly has the attention of traders on Twitter:
This comment from Ian Winer, director of equity trading at Wedbush Securities, might provide you with a chuckle on this downbeat day.
“We’re not seeing panic selling,” Winer says in a Wall Street Journal story on today’s stock-market action.
“It’s more of a macro trade, with people taking some risk off the table.”
So it’s a big sell-off, but it’s short of a panic.
The VIX, or so-called “fear index,” surged 9.3% to 14.03 in recent activity, reports MarketWatch’s Wallace Witkowski.
The main indexes may have been able to find a floor in late morning trade.
They’re all still firmly in the red, but they’ve been creeping up from their session lows in the last 20 minutes or so.
A few more of the 30 Dow components have joined McDonald’s in positive territory — AT&T, Verizon, IBM and UnitedHealth.
Dow -162 points
SPX -16 points
Nasdaq -37 points
That IPO by Santander Consumer indicates confidence that U.S. consumers’ personal finances are improving, says one article that you can read here.
The auto lender’s shares (ticker = SC) were last up 8.5%.
The U.S. dollar fell below ¥104 on Thursday in a broadly risk-off environment, as evident from the drop in U.S. stocks, gains in Treasurys and pain in emerging-market currencies, said Richard Franulovich of Westpac Banking Corp. In recent trade, the dollar /quotes/zigman/4868099/realtime/sampled USDJPY fell to ¥103.70 from ¥104.48 late Wednesday.
As the Dow industrials wallow near a one-month low, gold is at a two-month high.
MarketWatch’s story on the precious metal says: “Gold futures advanced on Thursday, snapping a two-day skid with investors mulling the prospects for higher gold demand out of India as a drop in U.S. equities and a weaker dollar helped position prices for their highest close in more than two months.”
The comments section for this live blog has a bit of a debate on gold, with one reader saying gold “is in a bear market and has been since 2011,” while another says it’s “in a bull market and has been since 2009.”
Also on the gold front, the Guardian has a story on the subject. The U.K. newspaper probably will get some hate mail for this piece. Here’s an excerpt:
“…gold bugs believe that the fall of gold is a conspiracy. Global central banks, some gold bugs argue, are manipulating prices and gold will soar to set new records this year.
Well, there’s at least a small chance that this may be true. And there may have been a shooter on the grassy knoll on 22 November, 1963. But that still isn’t an argument in favor of loading up your portfolio with gold.”
For Netflix — last up about 15% — RBC Capital’s Mark Mahaney sees several drivers.
“A variety of factors were at play: strong execution, especially in international markets, rising customer satisfaction, a larger installed base of connected devices, the lack, so far, of a compelling alternative in most markets, and the impact of original series,” he told clients in a note.
With eBay — last up 1% — the Carl Icahn news (he wants PayPal spun off) has “stunned” Wall Street.
Read all about it in MarketWatch’s Tech Stocks column.
Tanweer Akram, senior economist at ING Investment Management says that investors are realizing that the recovery in the U.S. is still moderate while uncertainty in the rest of the world remains.
“Today’s batch of data was fairly positive, but also had aspects which indicate that recovery is not very robust. For example, the housing market strengthened in 2013, however, there is concern over rising mortgage rates as applications weakened. The jobs market is improving, but slowly.
Globally, we see concerns over China and its shadow banking system, as savers bypass official banks to put their money to work. Investors would like to see the government and the central bank ensure financial stability but the fact that there is no reliable way of assessing how bad the problem is, creates uncertainty.”
Herbalife Ltd shares tumbled after a Democratic senator Edward Markey called for a probe into the supplement company’s operations, saying it is “a possible pyramid scheme”. Herbalife just issued a statement saying it will address those concerns.
Hedge fund manager Bill Ackman has made similar claims and took a sizeable short position on the stock in late 2012.
Shares of Herbalife were last down 12.2%.
Stock markets across Europe closed down today, as news of contraction in China prompted broad selloffs.
FTSE 100 -0.8%
DAX -0.9%
CAC-40 -1%
STOXX Europe 600 – 1%
STOXX Europe 50 -1%
Main indexes deepened losses and Dow at session lows was off 201 points. On the S&P 500, financials and materials sectors suffered the most, while investors have piled into defensive telecoms – the only sector in green today.
Dow -168 points
S&P 500 -17.50 points
Nasdaq -37.89 points
10-year Treasury yields dropped ahead of an auction of inflation-protected securities and on track for their lowest closing level since before the Federal Reserve said it would scale back its bond-buying stimulus program, writes Ben Eisen.
10-year yield was last at 2.79%.
The drop in the long-dated yields boosted homebuilders. Lennar Corp is up 1%. Both PulteGroup Inc and D.R. Horton Inc pared earlier losses.
This chart shows the Dow Jones Industrial Average’s drop to a one-month low.
It’s been down more than 200 points at times this afternoon.
Speaking of the Dow, Tom Brakke over at the Research Puzzle had a good post recently about the blue-chip index vs. the Nasdaq.
He wrote: “The two indexes have changed a lot since 2000, but they still play their roles: The Nazz as some hip Hollywood hunk and, well, the Dow as some old fuddy-duddy like me.”
He also described the Dow as “still the market indicator that commands the attention of investment laity.”
Traders on Twitter are excited about the gold ETF’s move today:
Rough day for smartphone company stocks, led by Nokia, which slumped 9.6% after it announced fourth-quarter sales at its handset business dropped 29% on-year. Microsoft, which will soon take over that unit, shed 0.9%.
BlackBerry shares were also sinking, down 6% at last check, while Apple recovered from earlier losses to edge up 0.2%.
The main indexes have been slumping to fresh session lows lately.
Dow was last -219.07 points
SPX was last -22.78 points
This could end up being the biggest point drop for the Dow since Aug. 15, when it fell 225.47 points.
For the S&P 500, it could be the biggest point drop since… well, just since Jan. 13, when it fell 23.17 points.
Emerging-market stocks are really taking it on the chin today.
One key EM ETF (ticker EEM) has dropped to levels last seen more than four months ago, as shown in this chart.
EEM’s action is even getting linked to Justin Bieber by some market watchers on Twitter:
“In the past year markets got used to buyers who came in and bought the dip, preventing a serious pullback. If investors do not buy the dip this time, markets will experience a correction, which is long overdue,” says Quincy Krosby.
As selling on Wall Street intensified, volatility increased as well. The CBOE Vix index, otherwise known as Wall Street’s fear gauge, climbed 13.8 % to 14.62.
It is still below the historical average level, however.
To sum up today’s markets:
Gold up 1.9% to $1,262.60
Silver up 0.9% to $19,98
Oil tops $97
10-year yields drop to 2.77%
USD weakened against the basket of other currencies
Two of the Seattle area’s largest and best known companies are taking the spotlight in the after-hours session as Microsoft Corp. and Starbucks Corp. report quarterly results.
Shares of Microsoft and Starbucks were performing slightly better than average going into the close with losses in the 0.3% to 0.5% range, while the broader market was off by more than 1%.
Microsoft, which is expected to report earnings of 69 cents a share on sales of $23.66 billi0n, faces the challenge of declining PC sales that run its Office suite of software, and weak sales of its own devices, while word is still out on who will replace CEO Steve Ballmer.
At Starbucks, a migration to online shopping is resulting in fewer visits to brick-and-mortar stores, which tend to be a few steps away from a Starbucks, putting pressure on sales. Starbucks is expected to report a quarterly profit of 69 cents a share on revenue of $4.3 billion.
Shares in Apple Inc are back in focus, as prices rebounded after dipping into red and at last were up 0.9% .
After being down more than 200 points, the Dow ended up closing down by about 176 points, according to preliminary data.
So that’s the worst one-day point drop since… last week (Jan. 13, to be exact).
While the point drop for the Dow wasn’t the short year’s worst, the blue-chip index did close at a five-week low.
If you’re into chart levels, you might say it dropped to support at its 50-day moving average.
The S&P 500 and Nasdaq both snapped two-day winning streaks.
Each index had its biggest point drop since Jan. 13 (as was also the case for the Dow).
All three main indexes finished off their session lows, with the Nasdaq in particular paring a 1.2% slide to just 0.6%.
So there was at least some hope for the bulls in how the indexes ended the day.
In after-hours action, Microsoft and Intuitive Surgical are gaining ground after their quarterly results, while Starbucks is retreating.
You can read all about it shortly in an updated version of MarketWatch’s After Hours column, which will be posted here. It’s still in the works right now.
And that’s a wrap for this live blog. Thank you for checking it out today.
Follow today’s live bloggers on Twitter @AnoraJourno @SueChangMW @saumvaish @vicrek and @wmwitkowski