Traders John Panin, left, and Andrew O'Connor work on the floor of the New York Stock Exchange.
(USA TODAY) -- Stocks ended down sharply Monday as Wall Street
struggled to shake off the first down January for the Dow Jones
industrial average and the Standard & Poor's 500 since 2010.
Dow ended down a blistering 326.05 points -- losing 2.1% to 15,372.80.
The S&P 500 index dropped 2.3% to 1,741.89, while the Nasdaq
composite index tanked 2.6% to 3,996.96.
It was the Dow's worst
point drop in a little over seven months: The blue-chip index plunged
353.87 points on June 20. That was a day after the Federal Reserve said
that a tapering of its economic stimulus -- since begun -- was possible.
Weaker reports on U.S. manufacturing and construction spending brought fresh concerns about the economy.
Investors were also disappointed in auto sales from General Motors and Ford.
is clear is there is a lot of jitteriness in the market right now,"
says Thorne Perkin, president of Papamarkou Wellner Asset Management.
"The general investment environment is weak right now."
is being hurt by skittishness and profit-taking after last year's 30%
gain. Investor sentiment has also been hurt by the currency selloffs in
emerging market countries like Turkey and South Africa. Signs of a
slowdown in China and U.S. manufacturing has added to the gloom.
Perkin says the market pullback is healthy, especially given the
market's huge runup last year and the fact that the U.S. stock market
hasn't suffered a 10% correction since 2011.
"There's a risk-off
feel," Perkin says. "U.S. corrections are healthy. It's how you avoid
bubbles by having speed bumps in the road. To say the U.S. market is
overdue for a correction is maybe the understatement of the year. The
free ride is over and fundamentals will matter more now that the Fed is
printing less money."
The Federal Reserve, of course, began reducing its market-friendly stimulus this year.
Signs of risk aversion and investors preference for safer assets were abundant.
closely watched Wall Street "fear gauge" and volatility measure, known
as the VIX, climbed nearly 9% Monday to its highest level since early
October. Similarly, prices of long-term U.S. government bonds rose,
pushing the yields, which moves in the opposite direction, sharply
lower. The 10-year Treasury note sank to 2.61% Monday, its lowest yield
since early November and well below the 3.03% level it ended at in 2013.
stocks were lower as Japan's benchmark Nikkei 225 index fell 2% to
14,619.13 amid lingering jitters about weakness in the financial markets
of some developing countries. Japan's benchmark index is now down 10.3%
from its Dec. 30 high and officially in "correction" territory.
Markets were closed in Hong Kong, China, Taiwan and Malaysia for Lunar New Year holidays.
shares were also hammered. Germany's DAX index flopped 1.3 to 9,187 and
France's CAC 40 index tripped 1.4% to 4,108. Britain's FTSE 100 index
stumbled 1.1% to 6,467.
On Friday, the Dow closed down
149.76 points, or 0.9%, to 15,698.85. The S&P 500 closed down 11.60
points, 0.7%, to 1,782.59. The tech-laden Nasdaq composite ended down
19.25 points, 0.5%, to 4,103.88.
MORE: Down January for stocks is ominous for rest of the year
continue to flee to the safety of fixed-income investments. The yield
on the bellwether 10-year Treasury note fell to 2.61% from 2.65% Friday.
As recently as the first week of January, the yield, which moves
inversely to the price, was at 3.03%, according to Yahoo Finance data.
MORE: Skittish investors cling to defensive stocks
slow start on Wall Street in January, which often serves as a barometer
of how stocks trade for the entire year, is the latest worry of
skittish investors, who have been reacting negatively to roiled emerging
markets. According to the Stock Trader's Almanac, when the first month
of the year is negative the chances of finishing the full year in the
plus column drop to roughly 50-50, according to the Stock Trader's Almanac.
MORE: S&P 500 ends January with a loss: Bad 2014 omen?
U.S. crude for March delivery was down 87 cents at $96.62 a barrel in
electronic trading on the New York Mercantile Exchange. The contract
fell 74 cents to close at $97.49 a barrel.
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