For stock investors, February is starting out just as rough as January.
U.S. stocks are falling sharply Monday— pushing the Dow Jones industrial average down more than 300 points — on worries about sluggish growth in the world's two largest economies.
The slide follows the Dow's worst January performance since 2009. Many market watchers, however, see the dip as healthy, given the market's rapid rise last year.
KEEPING SCORE: The Dow was down 295 points, or 1.9 percent, to 15,403 as of 3:38 p.m. Eastern time. It fell as much as 317 points earlier in the afternoon. The Standard & Poor's 500 index lost 37 points, or 2 percent, to 1,744. The Nasdaq composite dropped 103 points, or 2.5 percent, to 4,001.
MONDAY TUMBLE: Stocks opened lower after earlier declines in European and Japanese indexes. The sell-off accelerated in the U.S. after a private survey showed U.S. manufacturing barely expanded last month as cold weather delayed shipments of raw materials and caused some factories to shut down. There were other signs of weakness in the world's largest economy. Construction spending rose modestly in December, slowing from healthy gains a month earlier.
GLOBAL CONCERNS: The report of sluggish U.S. manufacturing growth added to concerns about the global economy. Investors were unnerved by an earlier official Chinese manufacturing survey that showed factory output grew at a slower rate in January compared with December in the world's second-biggest economy. The report released on the weekend followed an HSBC survey that showed an outright contraction in manufacturing.
WINTER BLUES: A rough first day of trading in February extends January's stock-market stumble. Concerns about the global economy, U.S. company earnings, as well as turmoil in emerging markets, led the Dow to its worst January since 2009. The index slid 5.3 percent while the S&P 500 index fell 3.6 percent.
Investors are watching to see whether the market's performance worsens into what some say is an overdue correction in the market, or a drop of 10 percent.
"There's been a pretty significant change in sentiment for the market," says Erik Davidson, deputy chief investment officer for Wells Fargo Private Bank. "We're down now more than 5 percent from the highs we reached at the end of last year. So that's something a lot of people will be watching."
WEAK SIGNAL: All 10 sectors in the S&P 500 index fell, and telecommunications stocks posted the biggest declines, weighed down by AT&T and Verizon Communications.
SPINNING OUT: Ford shares slipped 3 cents, or 2.4 percent, to $14.60 and General Motors shares fell 75 cents, or 2.1 percent, to $35.34 after the automakers reported a drop in U.S. January sales, hurt by harsh weather that kept customers away from dealerships. GM sales fell 12 percent, while Ford said sales fell 7 percent. Chrysler bucked the trend with U.S. sales gains of 8 percent. Still, analysts expect U.S. auto sales to reach more than 16 million this year — a return to pre-recession levels.
TOY STORY: Mattel fell $1.77, or 5 percent, to $36.07. The world's largest maker of toys reported on Friday that sales of Barbie and Fisher-Price preschool items dropped in its fourth quarter.
DEAL DOUBTS: Jos. A Bank Clothiers fell $3, or 5.3 percent, to $53.22 in afternoon trading on continued doubts that a takeover bid by rival clothier Men's Wearhouse will go through. The two retailers have been dueling since October when Jos. A. Bank offered $2.3 billion for Men's Wearhouse.
DRUG BOOST: A few stocks posted gains. Pfizer rose 26 cents, or 0.9 percent, to $30.66, after the company reported that a mid-stage study of an experimental drug for advanced breast cancer met the main goals. The drug is seen as a potential huge seller. Pfizer was the only stock to rise among the 30 members of the Dow.
HEALTHY SELL-OFF: "The selling is an extension of last week's activity," says Frank Davis, director of trading at LEK Securities. "It looks like a healthy sell-off."
Davis anticipates that the sell-off will continue, especially since most of the economic data coming out in the next few weeks is data could have been negatively affected by the severe winter weather in the U.S.
SAFETY DANCE: Facing lower stocks and global jitters, investors moved into the relative safety of U.S. government bonds. Bond prices rose, and the yield on the U.S. 10-year Treasury note fell to 2.59 percent from 2.65 percent on Friday. The 10-year has had a dramatic move in the last two weeks. In mid-January, the 10-year note was trading at a yield around 2.9 percent.