U.S. stocks fall on worries over Chinese economy

U.S. stocks fell broadly Thursday after a report from China added to growing signs that the world’s second-largest economy is slowing. The selling spared few companies, even those reporting solid earnings.

“It’s pretty ugly,” said Randy Frederick, a managing director of active trading and derivatives at Charles Schwab. “When you’ve got a market that’s near record highs … people are looking for any excuse to take profits.”

In the Standard and Poor’s 500 index, nine of every 10 companies dropped.

Stocks fell from the start of trading after an HSBC survey of Chinese manufacturing fell to the lowest point since July and suggested that the country’s factory sector was shrinking. Earlier this week, China reported its slowest annual economic growth since 1999.

The Dow was down as much as 232 points before trimming its loss late in the day. It closed down 175.99 points, or 1.1 percent, at 16,197.35. The S&P 500 lost 16.40 points, or 0.9 percent, to 1,828.46.

Technology stocks fell less than the rest of the market. The Nasdaq composite declined 24.13 points, or 0.6 percent, to 4,218.87.

Fearful investors poured money into U.S. government debt securities, pushing the yield on the 10-year Treasury note down to 2.78 percent from 2.86 percent late Wednesday. That was the lowest since Nov. 29. Yields fall on bonds when their prices rise.

The price of gold, another safe-play asset, rose $23.70, or 1.9 percent, to $1,262.30 an ounce.

Worries about China also hammered emerging market currencies.

Several U.S. companies fell after reporting their latest quarterly results, including KeyCorp, Johnson Controls and Jacobs Engineering. All three either met or exceeded analyst expectations for earnings, but were each down at least 3 percent as investors sold the broad market.

So far this reporting season, about a fifth of the companies in the S&P 500 have reported fourth-quarter earnings, with about 65 percent of them beating analyst estimates — a solid performance, said Christine Short, associate director at S&P Capital IQ. She said that is about the historical average.

But investors seem more focused on the global economy, and on projections from companies for the coming year.

“The guidance has been very guarded and analysts are not lifting their numbers for 2014,” said David Bianco, head U.S. stock strategist at Deutsche Bank.

The pullback comes after a stellar run for stocks last year. The Dow rose nearly 27 percent and the S&P, nearly 30 percent.

“The market at these levels is a bit skittish,” said James Dunigan, chief investment strategist at PNC Wealth Management. He added that “any kink in the growth story … is going to give investors pause.”

In other news:

NETFLIX: It surged $54.99, or 17 percent, to $388.72, the biggest gain in the S&P 500. After trading ended Wednesday, the streaming video company reported fourth-quarter earnings had climbed six-fold and that it had added 2.3 million subscribers during the period.

UNITED CONTINENTAL: It fell 75 cents, or 1.5 percent, to $48.43 after its prediction for revenue growth this quarter disappointed investors.

AMERICAN EAGLE OUTFITTERS: It dropped $1.12, or 8 percent, to $13.19 after announcing the unexpected departure of its CEO, Robert Hanson. The teen retailer had reported disappointing sales over the holiday season.

NOKIA: It plunged 67 cents, or 9 percent, to $7.03 after posting a fourth-quarter loss on falling handset sales. The mobile phone business is part of the device and services unit that the Finnish company has agreed to sell to Microsoft.

UNION PACIFIC: It rose $5.62, or 3 percent, to $174.12 after reporting a 13 percent jump in fourth-quarter earnings, beating analyst forecasts.

GENERAL MOTORS: CEO Mary Barra says she will largely keep in place the plans of her predecessor, from a restructuring in Europe to a focus on improving profit margins. But she hopes to accelerate that progress.

NEIMAN MARCUS: It says 1.1 million debit and credit cards used at its stores may have been compromised in a security breach last year. The high-end retailer said Visa, MasterCard and Discover have found 2,400 Neiman Marcus and Last Call customer cards that were used fraudulently.

MCDONALD’S: It reorted disappointing sales for its fourth quarter as the world’s largest hamburger chain saw fewer customers visit its restaurants.

SOUTHWEST AIRLINES: It is making more money thanks to a lower fuel bill and higher average fares. The company says net income for the final three months of 2013 totaled $212 million, up from $78 million a year earlier.

MICROSOFT: It reported revenue and earnings for its fiscal second quarter that topped Wall Street expectations, as the company sold 3.9 million Xbox One consoles to retailers and doubled revenue from its line of Surface tablets from a quarter earlier.

STARBUCKS: Quarterly profit rose by 25 percent as it benefited from lower coffee costs and stronger sales around the world.

DISCOVER FINANCIAL: Its fourth-quarter net income jumped 11 percent, as users of its namesake credit card and other loan services stepped up borrowing and the company set aside less money to cover potential loan losses.

HYUNDAI MOTOR: Its fourth-quarter profit increased 13 percent over a year earlier thanks to higher overseas sales.

TOYOTA: It remains the top-selling global automaker for a second year in a row, beating U.S. rival General Motors by some 270,000 vehicles in 2013, and set an ambitious target to sell more than 10 million vehicles this year.

APPLE: Billionaire Carl Icahn invested another $500 million in Apple, arguing the stock remains a bargain.

AP markets writer Steve Rothwell contributed to this story.