Wall St sinks on China, earnings

US stocks lose 1% on mixed earnings results, weak China data.

United States stocks are sharply lower in early afternoon trade after a report showed that Chinese manufacturing contracted for the first time in six months in January. Investors were also not enthused by the latest batch of earnings and data from the US.

At 0445 AEDT, the Dow Jones Industrial Average had lost 171.33 points, or 1.05%, to 16,202.01.

The broad-based S&P 500 sank 17.68 points, or 0.96%, to 1,827.18, while the tech-heavy Nasdaq Composite Index declined 37.60 points, 0.89%, to 4,205.41.

HSBC's China manufacturing sector purchasing managers index fell to 49.6, below the line between growth and contraction, raising concerns that the world's second largest economy is still trying to find its footing.

In US data news, weekly jobless claims rose by 1,000, which was broadly in line with market expectations. Existing home sales lifted as well, though not as much as forecast by analysts in an indication higher mortgage rates are having an impact on demand.

Europe's data was more warmly received as business activity, as measured by the purchasing managers index (PMI), hit a 31-month high.

In earnings news, McDonald's reported flat profit in the fourth quarter. That figure was expected by the market but not viewed as cause for much optimism.