All Is Not So Well: Stocks Slump on China Outlook, McDonald's Forecast
- The S&P 500
finished 0.89% lower at 1,828.46 while the Dow Jones Industrial Average shed 1.07% to 16,197.35. The Nasdaq was off 0.57% to 4,218.87.
- Chinese manufacturing activity shrank in January for the first time in six months, according to the flash Markit/HSBC Purchasing Managers' Index. The preliminary report showed a decline to 49.6 from the final December figure of 50.5. "The credit crunch in the nation has compromised with growth objectives, triggering worldwide concerns," said Singapore-based Phillip Futures investment analyst Chee Tat in a note.
- McDonald's stock was 0.46% higher even after posting fourth-quarter revenue and December same-store sales that came in a tad below estimates. The company expects January global comparable sales to be relatively flat. Quarterly earnings topped expectations by a penny.
- American Eagle Outfitters (AEO) finished 7.82% lower after announcing the departure of its CEO. Netflix (NFLX) closed 16.5% higher after reporting better than expected fourth-quarter earnings and 33.42 million streaming subscribers for the quarter.
- Initial jobless claims for the week of January 18 rose 1,000 to an as-expected 326,000. However, the four-week moving average fell by 3,750.
- The January Markit "flash" PMI manufacturing index was 53.7 - both the consensus forecast and the final December reading (both 55). The decline was broad based, as the output, new orders and employment indices all moved lower.
- The November Federal Housing Finance Agency's housing price index showed house prices rose 0.1% in November from October, indicating the real estate recovery may be losing strength. Prices climbed 7.6% from a year earlier.
- The Hong Kong Hang Seng closed off 1.51% while the Shanghai Composite fell 0.47%. The DAX finished 0.92% lower and the U.K. FTSE was 0.78% lower, all dragged down by the poor China data.
--- Written by Jane Searle in New York
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