US open: Stocks fall after weak China data

US stocks dropped on Monday after disappointing Chinese data added to concerns about the nation’s slowing economy.

The Dow Jones Industrial Average fell 0.73%, the Nasdaq dipped 0.63% and the S&P 500 was down 0.68% at 1433 GMT.

The official purchasing managers’ index for China manufacturing fell to 49.7 in January from 49.7 the previous month, missing analysts’ expectations for a reading of 49.6 and below the 50 level that separates a contraction from an expansion in sector activity.

The private PMI from Caixin on China manufacturing also registered a contraction in January at 48.4. However it was better than December’s 48.2 and analysts’ estimates of 48.1.

“For an extended period economic data from Beijing has repeatedly followed a negative trajectory and this has compounded the growing concerns that capital outflows may accelerate as the economy continues to slow,” said FXTM research analyst Lukman Otununga.

“Sentiment towards the Chinese economy is heavily bearish and despite the People’s Bank of China (PBoC) pledging to maintain a prudent monetary policy in 2016, this visible deceleration may force the central bank to unleash aggressive monetary policy in a bid to revive growth.”

In US data, personal spending was unchanged in December, missing expectations for a 0.1% increase and following November’s 0.4% gain, according to the Commerce Department. Personal income increased 0.3% in December, slightly higher than forecasts for 0.2% growth and after a 0.5% rise in November.

Still to come, US manufacturing PMI for January is due at 1445 GMT, ISM publishes its manufacturing index for January at 1500 GMT and construction spending figures will be released at 1500 GMT.

Meanwhile, oil prices continued to slump on dimming prospects of a deal on a production cut by global oil producers to address the supply glut. West Texas Intermediate crude fell 3.1% to $32.59 per barrel and Brent crude declined 2.1% to $35.24 per barrel at 1432 GMT.

In company news, Google’s parent company Alphabet is in focus as it posts its fourth quarter earnings after the market closes. It will be the first time the market will get to see how the tech giant’s non-Google products are doing, and the company could surpass the market capitalisation of Apple.

Aetna advanced as it reported a 38% jump in fourth quarter profits as medical costs fell.

Questar Corp. surged on news that utility company Dominion Resources Inc. plans to buy it for $4.4bn.

The dollar fell 0.40% against the pound and dropped 0.47% against the euro but was up 0.01% versus the yen.