Wall St falls; Dow, S&P end worst month since May 2012
A selloff in emerging markets sent a cold chill down Wall Street, triggering a slide and making January its worst month since May 2012 after one of its best years in more than a decade.
For January, the Dow tumbled 5.3 percent and the S&P 500 slid 3.6 percent - their worst monthly percentage declines since May 2012.
The Nasdaq ended the month down 1.7 percent, its worst monthly percentage loss since October 2012.
For the S&P 500, this marked the first time that it ended January with a loss since 2010, when the benchmark index kicked off the year with a drop of 3.7 percent.
The January loss followed the S&P 500's gain of 30 percent in 2013 - its best year since 1997.
The Dow Jones industrial average fell 149.76 points or 0.94 percent, to end at 15,698.85. The S&P 500 lost 11.60 points or 0.65 percent, to finish at 1,782.59. The Nasdaq Composite dropped 19.248 points or 0.47 percent, to close at 4,103.877.
For the week, the Dow fell 1.1 percent, the S&P 500 dipped 0.4 percent and the Nasdaq slipped 0.6 percent.
A selloff in emerging market currencies spurred some central banks to raise interest rates or intervene in markets to limit the swings, but investors worry it may not be enough to reverse the trend. The Fed's removal of stimulus added to the concerns because the extra liquidity has helped many of those markets.
Weighing on investor sentiment was data showing that inflation in the euro zone slowed this month to 0.7 percent from 0.8 percent in December. That reading confounded expectations for an increase to 0.9 percent and matched a low hit last October. The European Central Bank responded by cutting its interest rates to record lows.
Among the day's biggest decliners was Amazon.com Inc , which fell 11 percent to close at $358.69, a day after the world's biggest online retailer missed Wall Street's estimates for the crucial holiday period. Amazon also cautioned investors about a possible operating loss this quarter as shipping costs climb.
The FTSEurofirst 300 index of top European shares closed down 0.24 percent after dropping nearly 1.7 percent at its session low. In a move seen directly pressuring the Fed and European Central Bank, the International Monetary Fund urged central banks to ensure that a financial market rout in the developing world does not lead to an international funding crunch.
The euro was last down 0.4 percent versus the US dollar, trading at $1.3505.
Fund investors worldwide pulled $6.4 billion from emerging market stock funds in the week ended January 29, marking their biggest outflows since August 2011, data from a Bank of America Merrill Lynch Global Research report showed.
The benchmark 10-year US Treasury note was up 6/32, the yield at 2.6712 percent.
Gold was caught between the run to safety and the surge in the greenback, and spot prices dipped 0.2 percent. The precious metal was down more than 2 percent for the week but on track to post its first monthly gain since last August.
Brent oil fell 1.0 percent and US crude was little changed. Copper fell 0.6 percent to set a monthly drop of more than 4 percent, the largest since last June.
Chinese markets were closed for the New Year holiday and will remained closed into next week.