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Market Update

U.S. Stocks Extend World Markets Sell-Off

Author: Nichole Harper
Last Update: 10:46 AM ET May 23 2013

10:45 AM New York – World markets were on the edge after Nikkei plunged 7% and talks of stimulus unwinding put investors on alert. European markets also declined 2.2%. U.S. weekly jobless claims declined and manufacturing shrank for the first time in seven months in China.

Initial claims of jobless benefits at the end of last week declined 23,000 to 340,000, the Labor Department said today.

The decline in claims erased most of the gains in claims in the previous week and the four-week claims at the end of last week eased only 500 to 339,000.

In yesterday’s testimony to lawmakers, Fed Chairman Ben S. Bernanke said that the central bank’s decision to curtail the monthly purchase of $85 billion of bonds as early in “next few meetings.”

In a separate private survey released by Markit indicated U.S. Manufacturing Purchasing Managers Index declined to a seven-month low to 51.9 in May from 52.1 in April.

The factory growth slowed down was estimated on the weaker exports growth fiscal spending cuts at the federal government agencies.

European Markets

European markets plunged more than 2% after a sharp selloff in Asian markets on the worries that the U.S. Fed may withdraw stimulus earlier than expected.

Market indexes in the European Union fell the most in ten months.

FTSE 100 index declined 2.4% and the DAX index in Frankfurt trading dropped 2.4%. In Paris, CAC 40 index fell 2.2%.

U.K.’s gross domestic product increased 0.3% in the first quarter according to the data released by the Office for National Statistics. The economic growth picked up after consumer spending increased and companies built inventories offsetting a decline in exports.

Asian Markets

Market indexes plunged in Tokyo after the latest Chinese survey indicated manufacturing industry growth contracted and U.S. Federal Reserve comments raised the specter of stimulus unwinding.

Every member of the Nikkei index declined for the first time since the aftermath of earthquake and tsunami in 2011.

The latest Chinese manufacturing survey conducted by HSBC showed that the sector shrank for the first time in seven months.

The Purchasing Managers Index declined to 49.6 in May, the first decline since October, and a reading below 50 indicates shrinking sector.

Market indexes in India and Australia declined nearly 2%, in Hong Kong plunged 2.4% and in South Korea declined 1.3%.

Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc