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US stocks fall on worry over Chinese economy

Jan. 24, 2014 @ 07:03 AM

NEW YORK — U.S. stocks fell broadly Thursday after a report from China added to growing signs that the world’s second-largest economy is slow­ing. The selling spared few com­panies, even those reporting solid earnings.

“It’s pretty ugly,” said Randy Frederick, a managing director of active trading and deriva­tives at Charles Schwab. “When you’ve got a market that’s near record highs ... people are look­ing for any excuse to take prof­its. ” In the Standard and Poor’s 500 index, nine of 10 companies d ropped .

Stocks fell from the start of trading after an HSBC survey of Chinese manufacturing fell to the lowest point since July and suggested that the country’s fac­tory sector was shrinking. Ear­lier this week, China reported its slowest annual economic growth since 1999.

The Dow was down as much as 232 points before trimming its loss late in the day. It closed down 175.99 points, or 1.1 per­cent, at 16,197.35. The S&P 500 lost 16.40 points, or 0.9 percent, to 1,828.46.

Fearful investors poured mon­ey into U.S. government debt securities, pushing the yield on the 10-year Treasury note down to 2.78 percent from 2.86 percent late Wednesday. That was the lowest since Nov. 29. Yields fall on bonds when their prices rise.

The price of gold, another safe-play asset, rose $23.70, or 1.9 percent, to $1,262.30 an ou nce .

Worries about China also hammered emerging market currencies. The Argentine peso fell hard, and has now lost 16 percent of its value in two days, the fastest drop since the country’s economic collapse in 2002. The Turkish lira fell 1.3 percent and reached a record low against the dollar.

So far this reporting season, about a fifth of the companies in the S&P 500 have reported fourth-quarter earnings, with about 65 percent of them beat­ing analyst estimates — a solid performance, said Christine Short, associate director at S&P Capital IQ. She said that is about the historical average.
 

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