While you were sleeping: Manufacturing disappoints

 Equities declined on both sides of the Atlantic, continuing the trend of January, as data showed that China's manufacturing fell last month, while US manufacturing activity grew at the slowest pace in eight months, fuelling concern about global growth.

The US Institute for Supply Management's factory index dropped to 51.3 in January, from 56.5 in December. China's purchasing managers' index fell to 50.5 in January, from 51 in December.

American car makers did not provide positive news either. Ford and General Motors both reported bigger-than-expected falls in January car sales blamed on unusually cold winter weather. Shares of Ford dropped 3 percent, while those of General Motors shed 1.7 percent.

"Given the difficult weather in our largest sales regions, we are fortunate to have held in at retail as well as we did," John Felice, Ford vice president, US marketing, sales and service, said in a statement. "In areas where the weather was good, such as in the West, sales were up. The poor weather also had an impact on the timing of some of our fleet deliveries."

In afternoon trading in New York, the Dow Jones Industrial Average dropped 1.4 percent, the Standard & Poor's 500 Index sank 1.5 percent, while the Nasdaq Composite Index shed 1.8 percent.

In 2014 so far, the Dow has slumped 6.5 percent, the S&P 500 has dropped 4.9 percent. The Nasdaq has actually gained, up 3.6 percent.

To be sure, some including Wells Capital Management's James Paulsen say the recent weakness following the 2013 rally is not a sign that investors are turning bearish.

"It doesn't mean anything's necessarily changed," Paulsen, the Minneapolis-based chief investment strategist at Wells Capital, told Bloomberg News. "It argues that the market's behaving more rationally. To me, this looks more like a refreshing pause than a correction."

On Monday, shares of AT&T and Verizon were the biggest decliners in the Dow, dropping 3.3 percent and 3 percent respectively

Shares of Pfizer bucked the Wall Street trend, last up 2.2 percent, amid promising study results for its experimental breast cancer drug.

Janet Yellen was sworn in today as the chairman of the Federal Reserve's Board of Governors in Washington. She is due to report on monetary policy in semi-annual testimony before the House and Senate on February 11 and 13 respectively.

In Europe, the Stoxx 600 Index ended the day with a 1.3 percent slide from the previous close. The UK's FTSE 100 gave up 0.7 percent, Germany's DAX fell 1.3 percent and France's CAC 40 retreated 1.4 percent.

(BusinessDesk)