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Dow, S&P Post Worst Day in Seven Months as U.S. Manufacturing Slides, China Weakens

NEW YORK (TheStreet) -- U.S. markets tumbled Monday, the worst intraday performance since June 20, 2013, as a gauge of domestic manufacturing slumped and manufacturing in China weakened.

The S&P 500 plummeted 2.28% to 1,741.89, declining more than 5% from its Jan. 15 record of 1,848.38. The Dow Jones Industrial Average slumped 2.08% to 15,372.80. The Nasdaq shed 2.61% to 3,996.96. Last week, the S&P 500 rounded out its biggest January loss since 2010.

  • Manufacturing growth in the U.S. slowed in January as overall factory activity hit an eight-month low and new order growth fell by the most in 33 years. The Institute for Supply Management said its index of national factory activity dropped to 51.3 last month -- its lowest level since May 2013 -- from 56.5 in December.
  • International markets were lower Monday after China's official Purchasing Managers' Index weakened to 50.5 in January from 51 in December. The FTSE 100 in London closed down 0.69% and the DAX in Germany retreated 1.29%. The Hong Kong market was closed for the Lunar New Year holiday. Stocks in Japan declined nearly 2%.
  • Top laggards on the Dow included Verizon (VZ) and AT&T (T) which shed more than 3% and 4%, respectively, amid a price war between mobile carriers. Whirlpool (WHR) lost 5% after missing earnings expectations on Friday while Walt Disney (DIS) was 3.6% lower ahead of its results this week.
  • Yum Brands (YUM), the parent company of KFC, Pizza Hut and Taco Bell, is expected by analysts after Monday's closing bell to report fourth-quarter earnings of 80 cents a share on sales of $4.26 billion. Automakers are scheduled to release sales results. Ford (F) reported Monday that January sales fell 7% to 154,644 units, while retail sales fell 5% to 113,721 units.
  • Guidance for the first quarter of 2014 has been provided by 58 companies during the fourth-quarter earnings season. Of those, 37 are negative, 21 positive and zero were in line, producing a negative-to-positive ratio of 1.8, lower than the 15-year average, according to S&P Capital IQ's New York-based director for global markets intelligence Christine Short.
  • U.S. construction spending rose slightly in December to its highest level since March 2009, with a gain in private residential projects offsetting weakness in the public construction sector.
  • Federal Reserve Vice Chair Janet Yellen was sworn in as chair of the board of governors of the Federal Reserve System on Monday.
  • In company news, Herbalife (HLF - Get Report) jumped 7.2% after announcing the offering of $1 billion in convertible notes to help fund the cost of repurchasing its common shares.

-- Written by Jane Searle, Andrea Tse and Joe Deaux in New York

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