Market Update

Stocks Lower on China Data! Stocks on Wall Street were sharply lower at midday following the weakest manufacturing data out of China in the past six months. That data added to the weakness in shares of many Chinese companies, which were also impacted by news that a judge barred a number of China-based auditors from heading audits for six months and debate over what may have caused a recent Internet outage seen in the nation. The string of domestic economic reports that were released, including jobless claims, leading economic indicators, and existing home sales, were less than stellar and did little to abate the early selling pressure. The Dow fell just short of a loss of 200 points and has only recovered slightly, while the benchmark S&P index was also down about 1% near noon.

ECONOMIC EVENTS: In the U.S., initial jobless claims rose 1K from a revised total for last week to 326K, though that was a bit below the 330K consensus forecast. Markit’s ?flash? Purchasing Managers’ Index dropped to 53.7 in the preliminary January reading, after having risen to 55.0 in December. The Chicago Fed’s National Activity index slid to 0.16 in December from 0.69 in November. Existing home sales rose 1.0% in December to a 4.87M rate, which was a bit under the forecast for a 4.9M rate. The leading indicators edged up 0.1% to 99.4 in December, versus a forecast for a 0.2% rise. In China, the preliminary HSBC PMI slipped to 49.6 in January from 50.5 in December, marking the first time the reading fell below 50 in six months. In Europe, Markit’s flash Eurozone composite PMI jumped to 53.2 in January from a prior reading of 52.1, with both the underlying services PMI and manufacturing PMI beating forecasts.

COMPANY NEWS: Shares of eBay (EBAY) initially traded significantly higher in after-hours trading last night after the company reported mixed fourth quarter results, announced a $5B share repurchase plan, and disclosed that it received a proposal from Carl Icahn to spin-off its PayPal unit. This morning analyst reaction was decidedly mixed, as eBay shares were downgraded by at least three firms, but JPMorgan and Canaccord raised their price targets on the stock. Shares of eBay were nearly unchanged from yesterday’s close near midday…

MAJOR MOVERS: Among the notable gainers was Logitech (LOGI), which rose 21% after reporting better than expected profits and raising its fiscal year revenue guidance. Also higher was Ariad Pharmaceuticals (ARIA), which gained about 10% after the U.K.’s Daily Mail said the company has been approached by Eli Lilly (LLY) regarding a possible deal. Among the noteworthy losers was Hill-Rom Holdings (HRC), which fell 14% after its first quarter results fell signific.