Stocks Sink on Fed Worries, China Data

U.S. stocks opened with steep losses on Thursday, as fears over a tapering of the Federal Reserve’s bond-buying program and weak Chinese economic data sent investors fleeing from stocks. The Dow Jones Industrial Average lately dropped 110.89 points, or 0.72%, to  15,196.28.  The S&P 500 index declined 17.59 points, or 1.06%, to 1,637.76 and the Nasdaq Composite fell 34.92 points, or 1.01%, to 3,428.38.

China’s factory activity shrank for the first time in seven months in May as new orders fell, a preliminary manufacturing survey showed, entrenching fears that its economic recovery has stalled and that a sharper cooldown may be imminent. The flash HSBC  Purchasing Managers’ Index (PMI) for May fell to 49.6, slipping under the 50-point level demarcating expansion from contraction for the first since October.

The number of Americans filing new claims for unemployment benefits fell more than expected last week, pointing to resilience in the labor market despite belt-tightening by Washington. Initial claims for state unemployment benefits dropped 23,000 to a seasonally adjusted 340,000, the Labor Department said on Thursday, pushing back below the 350,000 mark that economists normally associate with a firming job market.

The U.S. flash manufacturing purchasing managers’ index fell to a 51.9 reading in May from 52.1 in April, Markit said Thursday. This is the lowest reading since last October. Details of the report were mixed. New orders improved in May, but employment grew at the slowest rate in seven months.

Ford Motor Co (F.N) will shut its two Australian auto plants in October 2016, blaming a strong currency and costs that are hitting manufacturers just as the country looks for other sectors of its economy to cushion the end of a mining boom.