- US manufacturing PMI unexpectedly falls
- Existing-home sales slip below forecasts
- FOMC meeting in focus after mixed data
Dow Jones: -0.98%
S&P 500: -0.88%
US markets fell sharply after the opening bell on Thursday as investors reacted to a barrage of mixed economic data, including figures which showed that growth in the American manufacturing sector unexpectedly eased this month.
Markit's preliminary US manufacturing purchasing managers' index (PMI) fell to a three-month low of 53.7 in January, down from an 11-month high of 55 in December. While the PMI still remains in expansion territory - above the key 50-point level - analysts had expected it to hold steady, sending Wall Street's main indices around 1% lower in morning trade.
Nevertheless, Analyst Cooper Howes from Barclays Research said: "While the short history of the Markit PMI limits its usefulness for forecasting the manufacturing ISM on a month-to-month basis, the headline reading is still solidly in positive territory and is in line with our view that manufacturing activity growth will pick up in 2014."
In other economic data: existing-home sales rose by a lower-than-expected 1% in December, rebounding after a 5.9% decline the month before; although jobless claims beat forecasts, rising just 1,000 to 326,000 last week but below the 330,000 expected by the market.
Furthermore, the Chicago Fed's National Activity Index, house-price figures and the Leading Indicators Index all came in below expectations.
The mixed data added to more uncertainty surrounding monetary policy ahead of the Federal Open Market Committee meeting next week, with markets waiting to see whether policymakers will continue to scale back their asset purchase programme.
PMIs from overseas were also being closely watched by markets today with the manufacturing sector in China unexpectedly contracting and business activity picking up in the Eurozone.
Commodity producers drop on Chinese data
Commodity producers, such as Alcoa and Cliffs Natural Resources, declined following a fall in prices for industrial metals after manufacturing data from China dropped below economists' forecasts.
Lockheed Martin Corp. slumped as the government's biggest contractor posted a 14% dip in fourth-quarter profit, reflecting cuts to federal government spending.
eBay gained as activist investor Carl Icahn proposed spinning-off the company's PayPal unit. The suggestion came as the online marketplace reported a rise in fourth-quarter earnings that beat expectations.
Netflix also surged as the subscription movie and TV series provider forecast customer growth ahead of analysts' estimates.