US stocks end deep in the red

Weak ISM data weigh on stocks

The U.S. stock market closed with sharp losses on Monday, 03 February 2014 after a much weaker-than-expected reading on manufacturing data as well as concerns over a slowdown in China, triggered the worst selloff in several months. Despite the sharply lower finish, today's session actually started in the green. However, sellers emerged during the opening minutes and intensified their efforts after the January ISM Manufacturing Index registered a large decline.

The Dow Jones Industrial Average dropped 326.05 points, or 2.1%, to 15,372.80. The Nasdaq Composite ended the day 106.92 points, or 2.6%, lower at 3,996.96, its worst one-day drop since June 1, 2012. The S&P 500 index closed down 40.70 points, or 2.3%, at 1,741.89.

All ten sectors finished in the red led by the telecom sector.

Furthermore, the selloff was accompanied by another wave of yen strength. Dollar/yen traded right above the 102.00 level at the start of the session, but retreated along with equities.

Today's economic data at Wall Street was limited to just a pair of reports. A closely followed ISM index on Monday showed that U.S. manufacturers expanded in January at the slowest rate in eight months as the pace of new orders sharply decelerated. The ISM Manufacturing Index for January dropped to 51.3 from 56.5 while the consensus expected the reading to fall to 56.0. That tied the largest one-month decline since October 2008.

Separately, total construction spending increased 0.1% in December after increasing a downwardly revised 0.8% (from 1.0%) in November. The consensus expected construction spending to increase 0.1%. The residential construction spending data does not line up with the contraction reported in the advance estimate for fourth quarter GDP growth.

Among major stocks under focus, Ford Motor shares fell 2.7% after the car maker reported a 7% drop in January sales. General Motors reported that its U.S. sales in January fell 12%, more than expected by analysts. The stock fell 2.3%.

Pfizer shares pared earlier losses to gain 0.7%. The pharmaceutical giant said a trial for its advanced breast cancer treatment met its primary goal.

Bullion prices ended sharply higher at Comex on Monday, 03 February 2014. U.S. gold futures rose sharply as the equity market and dollar sagged after a weak manufacturing survey from the Institute for Supply Management.

April gold futures rose $20.10, or 1.6%, to settle at $1,259.90 an ounce on the Comex division of the New York Mercantile Exchange.

March silver advanced 29 cents, or 1.5%, to $19.41 an ounce.

Crude Oil futures settled lower on Monday, 03 February 2014 as a gauge on U.S. manufacturing showing a drop in January and continued economic concerns over emerging markets pushed prices to their lowest close in a week.

March crude oil fell $1.06, or 1.1%, to settle $96.43 a barrel on the New York Mercantile Exchange.

Following the U.S. ISM data, the dollar dropped to its lowest level against the yen in more than two months. The dollar index slipped by 0.3% on Monday.

Tomorrow, December factory orders will be announced at 10:00 ET.

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