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Stocks Slump Dragged Down by Chinese PMI Data

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Stocks Slump Dragged Down by Chinese PMI Data

Stocks moved lower to start the first trading session of the year after notching up remarkable gains in 2013. Softer than expected PMI data from China somewhat eroded investor confidence leading to the lackluster start. ISM released robust PMI data, which jobless claims were in line with expectations. Stocks ended the trading session in the red, with the Dow Industrials notching up a triple digit loss.

China’s factory activity slowed in December according to the official and HSBC manufacturing surveys. The official PMI survey declined to 51 from 51.4 in November and the HSBC print slipped to 50.5 from 50.8. The most noticeable sub-component was the export outlook which fell to new 4-month lows at 49.1, while employment contracted further in the official index.

Jobless claims fell by 2,000 to 339,000 in the period ended December 28, 2013 according to the Labor Department. The median forecast of economists surveyed had called for 344,000 claims.

Economic activity in the US manufacturing sector expanded in December for the seventh consecutive month, and the overall economy grew for the 55th consecutive month, according to the Institute for Supply Management. Its latest showed the purchasing managers’ index registered 57%, the second highest reading for the year, just 0.3 percentage point below November’s reading of 57.3%. The new orders index increased in December by 0.6 percentage point to 64.2%, which is its highest reading since April 2010 when it registered 65.1%.

IPO market nears pre-financial-crisis levels, according to an industry report. The number of IPOs jumped 59% in 2013 to 230 and the amount raised climbed 31% to $62 billion. Bankers and investors expect the trend to continue in 2014. U.S. companies took part in mergers and acquisitions that surpassed $1 trillion in notional value in total in 2013, the most since the financial crisis. The amount rose 11% even as the global figure was flat.

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