Closing Bell Report: Stock Market Reacts to Poor Factory Data

Dow Jones Industrial Average drops due to growth concerns; Janet Yellen sworn in as Federal Reserve chair.
3:00 | 02/03/14

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Transcript for Closing Bell Report: Stock Market Reacts to Poor Factory Data
You're watching live coverage of the closing bell on ABC news digital. Ringing the bell this afternoon. The folks from the national gay and lesbian. -- -- Okay. Well there it is the closing bell for this Monday February 3. Hello everyone I'm Michelle Franzen in new York stock sinking today all three falling by at least 2% today. The Dow plunging more than 300 points investors fleeing after disappointing manufacturing numbers. For more on the market drop and the rest of the business headlines bring in -- cent toll from Yahoo! finance. Mike how bad was that factory area. You know the factory -- war was definitely bad relative to the expectations that it was an unexpected shortfall. You know in a segment of the economy the -- -- it's been relatively strong. But I have to say was this has been cumulative it's not just about today's data it's been about what's been going on for weeks now with a lot of turmoil in emerging markets bond and stock markets down there. The Japanese market has been a leader on the upside and they actually have had a steep fall lots of complicated currency moves happening in a general sense. That the economic numbers have not. I've been up to what we were hoping for including retail sales data coming out of the -- -- New -- so it seems like all this stuff built up in a market -- a lot of pent up selling because we essentially went straight up in the back part. Of 2013. People really were a bit over optimistic coming in and so a little bit of the softest came as a shock and it fed on itself. So -- factory manufacturing data might have been a tipping point but how much does Wall Street really care about US manufacturing. Well they care about it because it shows kind of that direction -- trajectory. -- growth here. So it's not the absolute driver of the economy but it's one area where you can kind of see a leading indicator. Our future strength or weakness that's one of the reasons it's concerned obviously the auto sector in the economy which would be counted. Of course in manufactured domestically has been a real standout for about a year and a half right now it's been. One of those leadership -- so it does care but again it wasn't really. Principally about the factory data today. And Mike all of this of course happening odds -- Janet Yellen the new fed chairs the first day not a welcome she was expecting. No not at all you know there actually is kind of an old -- on Wall Street that new Fed Chairman. Tend to get tested before too long usually that means -- -- economic crisis or some kind of big decision. That they have to make. You know relatively soon after getting. The jobs available is almost at the markets wanna see how -- -- and that's you know kind of saying too much about you know exactly how scripted these things can be but it is very telling. That these moves are happening at a time we thought fed policy was going to be relatively predictable. By you know they set themselves on a course from December they were gonna try to pull back the other levels. -- they're giving the economy in the form of in these bond purchases and it seems like they're very resolute to do that even in the face some weaker economic data which might be. One of the things that has some investors spooked and also. You know the Fed always says that they are not the central bank of the world they're not responsible for worrying about the Argentine peso the Turkish Lira all these other things going on emerging markets but people. Bring back to the -- door. But the fact that that they're saying that right now at a time when the rest of the world is in some kind of turmoil. Maybe gave an extra level of worry to the markets and certainly maybe not worried about it but they're watching it so should we expect any changes with the taper of the stimulus. You know it's probably -- too soon to anticipate any changes now first of all it would be you know over a month. Before they actually did have another meeting at which they would sort of change this. But they have always said that there are receptive. Economic data as it comes and and that will set the future course it's not as if they're going to be very rigid about it and -- you know we're gonna pull back at the prescribed -- No matter what happens so I do think. You're going to hear a little more talk if this weakness persists especially in economic numbers. That you know maybe it will put the tapering process so called on hold. I do think there's another element that's hard to quantify here. But due to weather and the extreme kind of in eruptions it's caused. In parts of the economy is probably giving people the idea a lot of the economic numbers coming out for the first quarter are going to be kind of noisy and untrustworthy and we're not going to be able to draw. The conclusions from them which might put us in a little more of a limbo state. As we await to see exactly how strong in the economic gotten him momentum -- at this point that's very interesting is whether as part of a -- -- -- the Dow has -- -- ugly start -- this year falling nearly 12100 points. Are things looking any better because you said that overseas markets don't seem to be fair -- -- -- -- Well this in a way you can look at it as a catch down moves by the by the Dow in the American indexes because the emerging markets have been weak for some time. -- Japan has been impacted a lot -- more than US market so. It's almost as if you know the weakness finally reached the -- over here so there's no real. Way to Seau exactly how we build ourselves out of this look at me think if you have to broaden out the perspective a little bit. -- markets are down. Bit more than 5% year to date from an all time high. We've gone extremely long time you know more than -- Two years. Basically without a decline of at least 10% in the market that's kind of an unusually long -- without having a significant. Pull back so in that context it looks and -- -- normal for a very long term chart but doesn't really feel normal -- it's happening because. In really seeming a blow soon like a blink and a few weeks. We gave back a few months worth of gains from the end of last year yeah with that rough start this year. And the drop should we be worrying because January is usually a -- month. -- January here's what's what's inching his January is usually stronger than. Then most other months. New money coming into the market and a lot of people expected that coming into the year. Now there's this other kind of historical pattern that says when January's weak you have a larger than expected chance for the rest of the year not to be so good. But that's a little more it's more of a coin flip it's really not a very strong tendency when that January's -- usually a pretty good signal that the rest -- -- going to be out. So at this point I think we're we're kind of adrift when it comes through whatever signal January was -- sending. But it's it's certainly telling though when you have weakness that -- time of the year when you know as a seasonal tendency tends to be strong so we have to be alert that the trend. It's been strong for so long might be -- undergoing a change. Now we can't let you get away without talking about something. Referring to the Super Bowl and while the market as a whole is falling one -- that stuck out today it was a RadioShack that company of course nearly everyone. Had forgotten about and one Super Bowl ad pushes that into stardom again maybe. It certainly seems like that there's really no other good explanation you know for why this RadioShack shares would be rallying on -- -- knows everything else was down now of course stock has been actually battered over the years as people thought that it was a case -- obsolete chain. -- but it is very telling that the change comes out shows and has a sense of humor about herself tries to revamp its approach to electronics retail and some investors say hey. Maybe they've got it figured out better than we expected. So what pick up over on the -- you think before we let -- go let's take one more look at the Dow right now it ends the day. More than 300 points down -- cent toll from Yahoo! funds financed think you again for joining us. -- -- And you've been watching the closing bell report I'm Michelle Franzen -- New -- they -- For your latest headlines.

This transcript has been automatically generated and may not be 100% accurate.

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