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Stocks Slide Again After Bad Manufacturing Data

Posted at 3:35 PM, Feb 03, 2014
and last updated 2014-02-03 15:35:28-05

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Photo from CNN Money

(CNN) — February is looking an awful lot like January for investors.  Emphasis on awful.

The Dow tumbled more than 300 points Monday afternoon, or almost 2%, after a much worse-than-expected reading on manufacturing activity. The S&P 500 and Nasdaq were down more than 2%. CNNMoney’s Tech 30 index was also down sharply.

Investors were disappointed after the Institute for Supply Management’s monthly index showed that manufacturing activity last month expanded at its weakest pace since May.

The bad news comes as investors are still reeling from a rough January. Disappointing earnings and volatility in emerging markets sent stocks sharply lower during the first month of the year. The Dow tumbled more than 5% last month — its worst January since 2009.

Many experts think the market could fall further, following big gains in 2013 and the fact that the stocks haven’t taken a big breather in a while. Though stocks took a small step back last spring, they haven’t experienced a correction, typically defined as a decline of 10% or more, in more than two years.

With Monday’s losses, the Dow is down more than 7% from the all-time high it hit on the last day of 2013, while the S&P 500 has fallen almost 6% from the all-time high it reached last month.

The possibility of a correction was a hot topic among traders on StockTwits.

$SPY way over extended,” said MacDee. “Been overdue for a severe severe correction. Bearish.”

But leopardtrader said he’s using the weakness as an opportunity to buy stocks: “Market keep creating great opportunities. The rebound will be fast and furious as usual $SPY.”

Still, others were worried by the fact that many traders are dismissing the pullback as a normal and healthy correction. That could mean that stocks are in for a sharper downward move.

$SPY no one is predicting anything more than a correction which makes me think we might be in trouble…Bearish,” said Undecided.

Related: Fear & Greed Index

In corporate news, Herbalife (HLF) shares rose in early trading after the company said fourth quarter earnings would top forecasts. The company also raised the amount of its planned share repurchase by $500 million. But the stock gave up all its gains after hedge fund manager Bill Ackman’s firm Pershing Square released a series of reports detailing why it thinks Herbalife is a pyramid scheme.

The activist investor has made these accusations about Herbalife for more than a year, but the nutritional supplements marketer has refuted those claims.

Shares of Jos. A. Bank Clothiers (JOSB) declined after The Wall Street Journal reported that the company is in talks to buy fellow apparel retailer Eddie Bauer. The potential deal would be the latest twist in the battle between Jos. A. Bank and Men’s Wearhouse (MW). Both retailers have offered to buy each other.

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