Wall St down as US manufacturing data disappoints

Specialist Jason Hardzewicz, left, and trader Michael Zicchinolfi work on the floor of the New York Stock Exchange. File photo / AP

Wall Street fell overnight after a report showed a slide in the pace of US manufacturing growth, while China's manufacturing also provided cause for concern.

The preliminary reading of Markit's gauge for US manufacturing slid to 55.5 in March, down from a 45-month high of 57.1 in the prior month.

"The manufacturing PMI adds to evidence that the sector has shrugged off the weather-related weakness seen earlier the year, with strong demand encouraging firms to expand and hire new staff at a robust pace," Chris Williamson, chief economist at Markit, said in a statement.

"The buoyant growth in March rounds off the best quarter for three years, indicating that the sector should provide a robust contribution to GDP in the first quarter," Williamson said. "One area of concern is the sluggish growth of exports, but this weakness is being more than offset by strong domestic demand."

Still today the data proved insufficient for investors. In afternoon trading in New York, the Dow Jones Industrial Average fell 0.26 per cent, the Standard & Poor's 500 Index shed 0.59 per cent, while the Nasdaq Composite Index dropped 1.43 per cent. Nasdaq was dragged lower by selling of both tech and biotech listed shares.

In Europe, the Stoxx 600 Index ended the session with a slide of 1.1 per cent from the previous close. The UK's FTSE 100 retreated 0.6 per cent, France's CAC 40 fell 1.4 per cent, while Germany's DAX sank 1.7 per cent.

Markit's index for manufacturing and services in the euro zone dropped to 53.2 in March, from 53.3, according to preliminary readings. In Germany, Europe's engine economy, manufacturing weakened to 53.8 from 54.8.

And in China, preliminary data indicated another weakening of manufacturing in the world's second-largest economy. HSBC and Markit's Purchasing Manager's Index slid to 48.1 in March, down from February's final 48.5 figure.

The "reading for March suggests that China's growth momentum continued to slow down. Weakness is broadly-based with domestic demand softening further," Hongbin Qu, chief economist, China & co-head of Asian economic research at HSBC said in a statement.

"We expect Beijing to launch a series of policy measures to stabilise growth. Likely options include lowering entry barriers for private investment, targeted spending on subways, air-cleaning and public housing, and guiding lending rates lower."

Shares of Netflix tumbled, last down 6.5 per cent, following a Wall Street Journal report that Apple has held talks with Comcast about streaming live and on-demand television content.

Also declining was the price of gold as investors reassessed its appeal following Federal Reserve Chairman Janet Yellen's comments last week that US interest rates might rise as early as the first half of 2015, earlier than most analysts and investors had anticipated.

"People don't want gold in a rising interest-rate environment," David Meger, the director of metal trading at Vision Financial Markets in Chicago, told Bloomberg News.

Gold futures for June delivery fell 1.4 per cent to US$1,317.80 an ounce on the Comex in New York.