After tough January, stock extend slide

Published on NewsOK Modified: February 3, 2014 at 6:05 pm •  Published: February 3, 2014
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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. The report released on the weekend followed an HSBC survey that showed an outright contraction in manufacturing.

Any signs of slowdown in China's economy — the world's second-largest — can spell bad news because it drives exports and is a key trading partner for developing countries such as South Africa and Indonesia that supply Chinese factories with raw materials.

Investors have been looking for more pullbacks this year and possibly a correction, the technical term for when a stock market index like the S&P 500 falls 10 percent or more. Three months ago, analysts at Goldman Sachs said there was roughly a 60 percent chance that a correction would happen this year.

Monday's slide moved the market closer to that possibility.

Among other negative signs for the market: In 2013, the Dow had only one 300-point-plus down day. It's had two 300-plus drops in 2014, barely two months in.

"I think we are in correction phase and the bias will be to the downside for a while longer," said Frank Davis, director of trading at LEK Securities. "It would make sense to see a healthy pullback after last year. Air has to come out of the market."

All 10 sectors in the S&P 500 index fell, and telecommunications stocks posted the biggest declines, weighed down by AT&T and Verizon Communications.

Mattel fell $1.79, or 4.7 percent, to $36.05. The world's largest maker of toys reported on Friday that sales of Barbie and Fisher-Price preschool items dropped in its fourth quarter.

Also among the decliners: Jos. A Bank Clothiers, which fell $2.83, or 5 percent, to $53.39 on continued doubts that a takeover bid by rival clothier Men's Wearhouse will go through. The two retailers have been dueling since October when Jos. A. Bank offered $2.3 billion for Men's Wearhouse.

A few stocks posted gains.

Pfizer rose 20 cents, or 0.7 percent, to $30.60, after the company reported that a mid-stage study of an experimental drug for advanced breast cancer met the main goals. The drug is seen as a potential huge seller. Pfizer was the only stock to rise among the 30 members of the Dow.

Facing lower stocks and global jitters, investors moved into the relative safety of U.S. government bonds. Bond prices rose, and the yield on the U.S. 10-year Treasury note fell to 2.58 percent from 2.65 percent on Friday. The 10-year has had a dramatic move in the last two weeks. In mid-January, the 10-year note was trading at a yield around 2.9 percent.

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AP Markets Writer Ken Sweet contributed to this report from New York.



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