Stocks fall out of bed after weak factory report, Dow -326

|By:, SA News Editor

Amid jittery investor sentiment about the global economy, there's now reason to worry about weakening U.S. growth as well after the January ISM manufacturing index surprisingly tumbled to an eight-month low, sparking stocks to their biggest selloff since June.

The Dow fell 326 points (2%), the S&P 500 plunged (-2.3%) through its 1,770 support level, the Nasdaq slid 2.6%, and the Russell 2000 plummeted 3.2%.

Growth concerns surrounding China arose again after the country's manufacturing PMI came in at a six-month low.

Financial stocks were hit hard (-2.5%) amid broad weakness, consumer discretionary tumbled again (-2%) to extend the sector's YTD decline to 12%, and automakers lagged after Ford and GM posted big declines in January sales.

The retreat sent the VIX to its highest level since June; over the past two weeks, the near-term volatility gauge has added more than 72%.

Treasury prices soared, sending yields to new three-month lows, with the 10-year yield sinking 7 bps to 2.58%; the dollar edged lower against other global currencies; gold added 1.6% to $1259.50/oz.