Today: Wall Street plunges as concerns about emerging markets continue to wreak havoc on stock prices in 2014.
The Lead: Wall Street declines as U.S. economic metrics cause concern
Wall Street's downhill 2014 continued in the first session of February, as indexes dove more than 2 percent Monday to add to January's poor performance amid concerns that economic conditions in the United States are worsening, joining worries about emerging markets.
All three major U.S. stock indexes plunged Monday after the Institute for Supply Management's monthly survey of U.S. manufacturing activity detailed an unexpectedly sudden slowdown in January. The report, combined with news of weakening job growth in December and diminished auto sales, could be a sign of economic struggles in the U.S.
"Everyone walked in this year expecting a continuation of at least growing economic activity and the latest data we've been seeing throw a bit of cold water on that theory," Bill Schultz, chief investment officer for McQueen Ball & Associates, told Bloomberg News. "Economic activity was not as strong as people expected. People are taking a pause, reassessing where they stand."
Negative news about the U.S. economy follows severe doubts about emerging markets, most notably China, which received more bad news Monday with a report detailing diminished growth in the January output of its factories.
The dual fears of tougher economic conditions at home and abroad have arrived at the same time that Wall Street's security blanket is being removed, with the Federal Reserve beginning to pull back on its stimulus efforts. The result has been fear of the unknown.
"Central banks have provided unprecedented liquidity to the markets," TD Bank Financial Group chief economist Craig Alexander explained to the Associated Press. "What happens when that liquidity starts to get withdrawn? The actual answer is, we don't know."
With uncertainty rearing its ugly head, investors seemed to be moving in lock-step to sell shares Monday.
"The consensus for what trades would work in 2014 was the same for every single type of investor," Jeff Yu, head of single-stock derivatives trading with UBS, told the Wall Street Journal. "Now everyone's heading for the door at the exact same time."
The recent declines, which led to January becoming the worst month for Wall Street in more than a year, have pushed the market down more than 5 percent but have not yet led to a full-fledged correction, defined as a move of more than 10 percent. Some observers believe the current changes to be overall positive, however, as 2013's huge gains come back down to earth and set up a market stronger in its fundamentals.
"It's a bit painful for investors to see the equities markets drop as they have, but this is healthy for this market," EverBank senior market strategist Chris Gaffney told AP. "We've been almost 2 1/2 years without a 10 percent correction. So we're still in that healthy correction, if you will."
SV150 market report: Apple gains slightly, but other Silicon Valley stocks tumble
Tech stocks were some of the worst hit Monday, with the Nasdaq suffering its worst day since June 2012 and the SV150 joining in with a 2.2 percent decline despite Apple's ability to clock small gains while the rest of Wall Street suffered.
Apple moved 0.2 percent higher to barely stay atop $500 a share Monday, closing at $501.53. News outlets produced reports on the Cupertino company's rumored smartwatch device Monday that suggested a main goal of the device will be tracking the vital signs of the wearer for health and fitness uses. Apple's legal team stayed busy fighting the government's e-books case, with attorneys general of 33 states offering up a figure close to a billion dollars for damages they seek from Apple in the case; a hearing on Tuesday will look at Apple's appeal to rid itself of the antitrust monitor appointed to the company when it lost the court case last year. Apple did not pay the big bucks for a flashy Super Bowl ad on the 30th anniversary of its legendary "1984" commercial ahead of the Macintosh's debut, but it did show off a new advertisement shot entirely on iPhones.
Declines were much more common for Silicon Valley stocks Monday. Google fell 4 percent to $1,133.43 while being told to move its barge project from its current location in San Francisco Bay; the Mountain View search giant was already busy with another waterborne venture, testing a new ferry service from the East Bay to the Peninsula. Facebook, which will celebrate its 10th birthday Tuesday, fell 1.7 percent to $61.48 while debuting its new Paper app, which prompted anger from another company that already debuted an app with the same name. Google and Facebook released new information on government requests for user data after tech companies' settlement with the government allowed more disclosures, but Yahoo ended up with more requests than either of its younger competitors; the Sunnyvale company dropped 3.1 percent to close at $34.90. Hewlett-Packard lost 3.3 percent to $28.04 after revealing auditors' reports on the extent of acquisition Autonomy's alleged financial malfeasance and CEO Meg Whitman's compensation for 2013. Intel let shareholders know that it is reflecting a "cultural shift" in changing how it determines compensation for top executives, and the Santa Clara chipmaker's shares declined 2.4 percent to $23.95. Violin Memory stock stayed steady at $3.78 after the Santa Clara storage company named a new CEO, while Silicon Valley's solar companies were hit hard, with SunPower dropping 10 percent to $29.14 and SolarCity losing 5.8 percent to $69.83.
Up: Zynga, Twitter, Apple, LinkedIn
Down: SunPower, SolarCity, Google, Salesforce, VMware, Intuit, HP, SanDisk, Symantec, Yahoo, Pandora, Oracle, Intel, Tesla, Gilead
The SV150 index of Silicon Valley's largest tech companies: Down 32.25, or 2.16 percent, to 1,459.81
The tech-heavy Nasdaq composite index: Down 106.92, or 2.61 percent, to 3,996.96
The blue chip Dow Jones industrial average: Down 326.05, or 2.08 percent, to 15,372.8
And the widely watched Standard & Poor's 500 index: Down 40.7, or 2.28 percent, to 1,741.89
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.