Dow Drops as Manufacturing Sector Shows Weakness, Nasdaq Slides as Biotechs Decline

NEW YORK (TheStreet) -- U.S. markets closed lower Monday, ceding early gains after poor manufacturing data in the U.S. and China, the world's first- and second-largest economies.

  • The Dow Jones Industrial Average lost 0.16% to 16,276.89, while the S&P 500 was off 0.49% to 1,857.46. The Nasdaq shed 1.18% to 4,226.38, as biotech stocks declined.
  • Biotechs continue to lose their bloom, with the S&P 500 biotech index falling more than 4% in afternoon trade on Monday after a dive of more than 5% on Friday. Friday's sector loss -- the steepest since late 2011 -- was triggered by a letter from the House Energy and Commerce committee to the chief executive of Gilead Sciences (GILD), questioning company plans to sell a hepatitis C treatment for $84,000 a dose. Mylan (MYL) closed 4.2% lower on Monday, while Gilead was broadly flat after shedding nearly 5% on Friday.
  • U.S. manufacturing activity slowed in March after a near four-year high last month, with the Markit preliminary U.S. Manufacturing Purchasing Managers Index slipping to 55.5 from 57.1 in February. The result fell short of expectations of a reading of 56.5. The flash Markit/HSBC China Manufacturing PMI showed a decline to an eight-month low of 48.1 in March. On a positive note, new export orders increased for the first time in four months, while the weak headline PMI data helped sparked stimulus chatter. The flash eurozone PMI Composite Output Index fell to a 2-month low of 53.2 in March.
  • Apple (AAPL) shares added 1.2% after The Wall Street Journal reported that the company was in talks with Comcast about teaming up for a streaming-television service that would use an Apple set-top box and get special treatment on Comcast's cables to ensure it bypasses congestion on the Web. Herbalife (HLF) popped more than 6.5% after announcing that it was nominating three additional Carl Icahn designees to its board. Also, it was reported that Cisco (CSCO) was planning a global intercloud network of public, private and hybrid cloud environments as well as plans to invest more than $1 billion to expand its cloud business during the next two years. Top losers in the S&P included Alexza Pharmaceuticals (ALXA), Netflix (NFLX) and Facebook (FB). Top losers in the Dow included Pfizer (PFE) and Merck (MRK).
  • President Obama will meet this week G-7 leaders in response to the crisis in Ukraine.
  • International markets were mixed. The FTSE 100 was 0.56% lower, the DAX in Germany was off 1.65%, the Nikkei 225 in Japan finished up 1.77%, while the Hong Kong Hang Seng rose 1.91%. Benchmark U.S. stock indices closed lower Friday, as investors balanced data showcasing the strength of the economic recovery against the nervousness around a hike in rate guidance from the Federal Reserve. Volatility played a role in Friday's market action due to options expirations.
  • In other news, Malaysia's prime minister said the long-missing Malaysian Airlines flight 370 crashed in the southern Indian Ocean, with no survivors.

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

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