Stocks remained in the red by mid-afternoon Monday, the first day of trading in February, as crude oil sold off on worries over Chinese demand.
The S&P 500 was down 0.3%, the Dow Jones Industrial Average slid 0.38%, and the Nasdaq tumbled 0.17%.
Weaker data from China exacerbated worries over demand for crude oil. China's factory activity fell to a three-year low, dropping further into contraction territory for its sixth straight month. West Texas Intermediate crude oil fell 6% to $31.61 a barrel. Prices have fallen 16% since the beginning of the year.
Disappointing U.S. construction spending in December pointed to even weaker economic growth in the fourth quarter. Spending in the U.S. rose 0.1% to $1.17 trillion to end last year, one-sixth the pace economists had expected.
The disappointing read pulls likely fourth-quarter GDP growth to just 0.5%, according to BNP Paribas analysts. The Bureau of Economic Analysis had pegged fourth-quarter GDP at 0.7% growth in its first estimate released last week.
Manufacturing in the U.S. remained in contraction for its fourth straight month in January. The ISM Manufacturing Index remained at 48.2 in January compared with an expected increase to 48.3.
Meanwhile, consumer spending was flat in December even as personal income rose. Consumers have benefited from lower gas prices in the past few months which economists had hoped would fuel increased consumer spending.
The report is "an indication that U.S. households are rebuilding a formidable precautionary savings war chest that could cushion spending in the event of a downturn," explained Millan Mulraine, deputy chief U.S. macro strategist at TD Securities. "Households are continuing to stock away their labor and energy windfall income, which should provide a favorable platform for sustaining personal spending in the event of a downturn."
Lumber Liquidators (LL - Get Report) lost earlier highs but remained in the green after trading was briefly halted for volatility. Shares surged on reports the company has reached a deal with the Department of Justice to settle investigations into whether it illegally sourced timber products.
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Credit Suisse (CS - Get Report) and Barclays (BCS) moved lower after agreeing to pay $154.3 million to settle government investigations into their "dark pool" exchanges. The Securities and Exchange Commission and the New York Attorney General had been looking into claims the banks misled clients about being able to safely trade on their "dark pool" financial exchanges. The settlement is the largest for investigations into privately run stock exchanges.
Dominion Resources (D - Get Report) fell 1.4% after agreeing to buy Questar (STR) in a cash deal valued at $4.4 billion. The Virginia-based energy company will pay Questar shareholders $25 a share, around a 30% premium to its January average price. The deal will likely close by the end of the year.
Nokia (NOK - Get Report) slumped 12% after issuing disappointing guidance following a patent deal agreement with Samsung Electronics. The company expects to receive around 1.3 billion euros ($1.4 billion) in cash from the deal through 2018; investors had hoped for more.