Weak purchasing manufacturing numbers were released this morning for both China and the U.S. The Markit Flash U.S. Manufacturing Purchasing Managers' Index was expected to hit 56.9 in March after coming at 56.7 in February, but this month's reading was just 55.5. As for China, the HSBC PMI reading hit an eight-month low at 48.1 for March, down from a 48.5 in February. The weak data in China hurt Asian markets and is likely contributing to the weakness here in the U.S. As of 1 p.m. EDT, the Dow Jones Industrial Average (^DJI 1.47%) was down by 74 points, or 0.46%, the S&P 500 dropped 0.80%, and the Nasdaq was lower by 1.79%.
One big loser today is Pandora (P). as shares are off by 9.1%. The decline comes as rumors swirl that Apple (AAPL 0.31%) is considering launching a potential new competitor to the Internet radio company. The music publication Billboard reported that Apple was talking to different music executives about launching a streaming music service. Nothing is confirmed, and it is difficult to say how it might affect Pandora. The company certainly has a lot of competition investors need to worry about, but this massive move simply on rumors is a little irrational.
Shares of hot fashion designer Michael Kors (CPRI -0.98%) were off by more than 4%. The move comes after very little news, but the stock was downgraded by Barclays last week and given an $85 price target. The negative sentiment about Michael Kors was something new for Wall Street, as the company has been a darling since going public more than two years ago. The analyst at Barclays indicated that the stock was simply overvalued at this time. An overvalued stock and weakening U.S. and Chinese economies, as indicated by the PMI data, is likely what's scaring investors away today.
Another stock many consider to be overvalued is Netflix (NFLX -0.68%) which today has tanked more than 8.8%. The decline comes following reports that Comcast and Apple are working on a new television streaming partnership. The reports indicate that Apple is working on a program that will allow users to store programs in the cloud and no longer need the large cable box in their home. Both Apple and Comcast have declined to comment on the situation. Similar to Pandora, Netflix has a lot of competition, and with its share price so highly valued at this time, any little concern about new competition can hurt the stock. Investors just need to understand this roller-coaster ride and decide whether the anxiety associated with owning this kind of a company is worth the reward.
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