The US stock market recorded lowest selloff rates in several months as it closed with sharp losses on Monday. The crucial factors contributing to the record low rates included the dwindling trust on the Chinese scenario (China recently reported record low annual growth rate of 7.7 percent for 2013), and an uninspiring national manufacturing market situation. The Dow Jones Industrial Average and the S&P 500 closed the day with the steepest declined amount since June 20th.
The January growth rate of the US manufacturing segment was the slowest in the last 8 months because of a sharp reduction in the pace of new orders. The Institute of Supply Management (ISM) index recorded a 51.3% manufacturing growth rate, falling from the 56.5% rate in December. The new low is the lowest since May 2013. This even surpassed the estimates of MarketWatch economists who predicted a fall to 56%.
The S&P 500 index fell below the key level resistance strata of 1,775 to score 1,741.89. The index closed at 40.70 points, falling by 2.3%. The key level is a crucial parameter noted by market experts because a fall from it triggers heavy automated selling by complex economic algorithms. The automated selling stock hold amounts to about 40% of the total market share.
The Dow Jones Industrial Average continued on the same falling trend. It dropped by 2.1%, or by 326.05 points to the final score of 15,372.80. This decline is essentially the seventh triple-digit fall in the 2013-14 financial year.
The NASDAQ Composite presents yet another disappointing perspective to the Wall Street, as it fell by 3,996.96 points on Monday, registering the worst single day drop following June 1, 2012. The composite index completed the day at 106.92 points, falling by 2.6% from previous day’s trading. The downfall of market indices continued as Russell 2000 small caps stocks index registered a loss of 3.1%, scoring 1,095.51 at the end of the day’s trading. This data records a 7.3% drop from the peak.
Quincy Crosby, market strategist from Prudential Financial noted that the ongoing polar vortex might have had an impact on the decline of market conditions. The analyst also referred to the market tapering measurements undertook by the Fed to generate a bad impression for the investors. Independent observers note the sharply deteriorating market conditions in China as a key parameter affecting the interconnected US market. Concerns over the Euro-zone deflation scenario and rampant selloffs in emerging markets further contributed in the downfall of the US stock market.