By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks sold off on Thursday, hit
by weak Chinese economic data and mixed U.S.company earnings.
The S&P 500(SPX) fell 16.7 points, or 0.9%, to 1,828.15
shortly after the opening bell, breaking a two-day winning streak.
The benchmark index is down 1.1% year-to-date.
The Dow Jones Industrial Average(DJI) dropped 168 points, or
1.3%, to 16,205.28 in early trade, falling for the third-straight
session.
The Nasdaq Composite(RIXF) shed 38 points, or 0.9% to 4,205.27,
trimming gains it clocked in since the start of the year.
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Investors appeared most worried about the surprise contraction
in China's manufacturing sector, which followed concerns over the
country's financial system. On Tuesday, China's central bank
announced it is injecting more liquidity into the system ahead of
the Lunar new year holiday.
"China's banks have been having liquidity issues since last
summer and what worries investors is contagion. If their problems
are severe, large banks in the U.S. and Europe will be affected,
triggering another crisis," said Quincy Krosby, market strategist
at Prudential Financial.
"What is happening in the U.S. stock market is consolidation and
realization that the Fed is not going to come to the rescue of the
markets with liquidity anymore, as the economy is growing again,"
she added.
Among the day's other economic data, an early gauge of U.S.
manufacturing dipped in January from the prior month, but some of
the slowdown was due to cold weather, Markit reported Thursday. The
U.S. flash purchasing managers' index slipped to 53.7 in January,
down from December's level of 55, which was an 11-month high. This
is the slowest improvement in conditions since October.
U.S. initial jobless claims rose slightly to 326,000. "Today's
jobless claims data had a worrying component -- continuing claims
stayed above 3 million. Investors are concerned about the labor
market and it is showing in today's selloffs," said Chris Gaffney,
senior market strategist at EverBank.
The leading economic index rose 0.1% in December, marking its
sixth gain in a row, the nonprofit Conference Board said
Thursday.
In the housing sector, sales of existing homes rose 1% in
December to a 4.98 million annual rate, while the median sale price
climbed 9.9% to $198,000.
In earnings news, McDonald's (MCD) reported nearly flat earnings
in the fourth quarter, as sales edged down slightly while expenses
rose. Earnings per share were $1.40, slightly ahead of consensus
expectations. Chief Executive Don Thompson called 2013 "a
challenging year." Shares in the fast-food chain rose 1% in early
trading.
Shares in Netflix Inc. (NFLX) rallied 15.7% after the video
streaming company reported better-than-expected earnings late on
Wednesday.
Herbalife Ltd (HLF) shares slid 10.6% after Sen. Edward Markey,
a Democrat from Massachusetts, on Thursday called for a probe of
the business practices of the company, which he called a "possible
pyramid scheme."
Santander Consumer USA Holdings jumped 8.3% on debut, after the
auto lender sold 74 million shares at $24, raising $1.8
billion.
Starbucks Corp. (SBUX) and Microsoft Corp. (MSFT) will report
after the market closes.
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