US stocks end tough January with another decline

NEW YORK — Stock investors were hit from all sides in January.

Concerns about the global economy and US company earnings, as well as turmoil in emerging markets, led the Dow Jones industrial average to its worst start since 2009. However, many investors remain hopeful that the problems will not spill over into the rest of 2014.

They even see the downturn as healthy, given the US market’s rapid rise last year.


The Dow slid 5.3 percent in January while the Standard & Poor’s 500 index fell 3.6 percent and the Nasdaq Composite declined 1.7 percent.

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Investors entered the year with some skepticism and nervousness. The market went basically straight up in 2013. The S&P 500 ended 2013 with a gain of nearly 30 percent, its best year since 1997.

‘‘No amount of negative news could derail the market last year,’’ said Jonathan Corpina, a floor trader at the New York Stock Exchange with Meridian Equity Partners.

But no stock market can go straight up forever.

Many investors expected 2014 to be a more muddled and volatile year for the market. Market strategists late last year were looking for the S&P 500 index to notch a modest gain of 4 to 6 percent, ending in the range of 1,850 to 1,900.


Investors were also looking for more pullbacks this year and possibly a correction, the term for when a stock market index falls 10 percent or more.

‘‘People did look at these stock market valuations at the beginning of the year with a degree of nervousness,’’ said David Kelly, chief market strategist with J.P. Morgan Funds. ‘‘A correction would probably be healthy for the market.’’

But many investors were surprised by January’s turbulence. With one exception, the Dow had triple-digit moves every trading day in January.

Still, with the broader S&P 500 down just 3.6 percent from its Jan. 15 peak, the downturn is hardly severe.

Investors point to the December jobs report, released on Jan. 10, as the event that started the troubles. The US government said employers created only 74,000 jobs in December, the worst month for job creation in since 2011 and far below expectations.


Up until then, weeks of data showed the US economic recovery was accelerating. US companies were selling record levels of goods overseas; layoffs had dwindled; and the Federal Reserve was pulling back on its economic stimulus program, citing an improving economy.

Many investors called the December jobs report a statistical fluke. But the report has weighed on stocks all month, investors said.

Other economic reports also painted a picture of US economic growth possibly flattening out instead of accelerating.

Investors combined these economic worries with mixed signals from US companies.

Wall Street is in the middle of earnings season, when the country’s major corporations report results for the final three months of the year. Half of the members of the S&P 500 have reported, and the results have been mixed. While fourth-quarter corporate earnings are up a respectable 7.9 percent from a year earlier, companies have been cutting their full-year outlooks and reporting weaker sales, according to data provider FactSet.

Adding to concerns about the US economy and earnings were problems overseas. The bad news started with China. A recent report showed manufacturing activity there unexpectedly contracted in January.

Then came currency troubles in smaller emerging markets, particularly Turkey, South Africa, and Argentina.

Investors shouldn’t panic yet, money managers say.

They will get the January jobs report next week. Also, another 93 members of the S&P 500 are scheduled to report earnings.