US stocks retreat amid China data, corporate earnings

US stocks declined, with the Dow Jones Industrial Average tumbling to a one-month low, as China’s manufacturing contracted and investors analyzed corporate earnings.

The S&P 500 index lost 16.40 points, or 0.9%, to 1828.46, and the Nasdaq Composite Index dropped 24.13 points, or 0.6%, to 4218.87. Materials and financials led declines in all 10 of the S&P 500 sectors. Dow Jones Industrial Average slid 175.99 points, or 1.1%, to 16197.35, the lowest close since December 19.

“We had some really weak data out of China, and thats scaring people,” said Ian Winer, director of equity trading at Wedbush Securities. He said that since the global rally in equities is predicated on global economic growth, “if you get weakness [in China], its something [stock] bulls have to question.”

A report from China indicated factory output may contract this month, based on a preliminary Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics.

Data yesterday showed applications for U.S. unemployment benefits held near a six-week low. U.S. house prices advanced 0.1% in November from October, slowing growth that indicates the real estate recovery may be losing strength, the Federal Housing Finance Agency said in another report.

“China is still the growth engine of the global economy,” said to The Wall Street Journal, Chris Gaffney, senior market strategist with EverBank Wealth Management, which manages money across asset classes for high-net-worth individuals. “The [currency] sell-off is the result of worries about Chinas growth, and thats also leading to broader stock-market declines.”

In corporate news, Netflix rose 16% to $388.72. The world’s largest subscription streaming service forecast customer growth ahead of analysts’ estimates and saying it may charge new users more to share accounts. The company predicted 2.25 million new domestic subscribers this quarter. The Los Gatos, California-based company also estimated first-quarter profit of $48 million, or 78 cents a share, compared with analysts’ projections of 75 cents.

McDonald’s added 0.5% to $95.32. The world’s largest restaurant chain posted fourth-quarter profit that was little changed from a year earlier even as U.S. same-store sales fell amid shaky consumer confidence and increased competition.

U.S.-listed shares of Nokia slid 8.7% after the company said handset sales declined in the fourth quarter. Nokia is expected to transfer its handset business this quarter to Microsoft this quarter. Microsoft shares gained 0.4%.

AT&T Inc. gained 1.4% to $33.80 and Verizon Communications Inc. added 1.1% to $47.86, as phone stocks were the only group to advance in the S&P 500.