US STOCKS-Wall St extends losses on China data, earnings; VIX jumps
* Netflix jumps after earnings
* Noble Corp falls, biggest loser in S&P on the day
* CBOE Volatility index at three-week high; jumps 11 pct
* Indexes off: Dow 1.2 pct; S&P 1.1 pct; Nasdaq 1 pct
By Angela Moon
NEW YORK, Jan 23 (Reuters) - U.S stocks fell on Thursday, with the selloff accelerating in afternoon trading, hurt by disappointing manufacturing data in China and a mixed bag of U.S. corporate earnings.
Major stock indexes were off more than 1 percent with financials and materials suffering the most as investors sold sectors closely associated with economic growth.
The market sentiment was dented by a report on manufacturing in China which showed a mild slowdown at the end of 2013 in the world's second-largest economy had continued into the new year.
The CBOE Volatility index VIX often used as a fear gauge on Wall Street, jumped 11 percent to 14.21, the highest level in about three weeks.
"Volatility tells us little about the real state of affairs in the economy," said Peter Cecchini, chief strategist at Cantor Fitzgerald in New York. "It will make a comeback in 2014, but equity markets will ultimately grind higher as the credit cycle slowly turns. We think we are in a 2011 paradigm for volatility with average VIX closer to its 20-year average of 20."
In earnings, McDonald's Corp reported weaker-than-expected revenue as fewer customers ate at its restaurants. Shares rebounded from earlier losses to trade up 0.1 percent to $94.98.
Netflix Inc shares surged 16 percent to $387.25 as the best performer on the S&P 500. The world's largest video-streaming company said Wednesday it added more than 2.3 million U.S. customers in the fourth quarter.
Earnings are expected from 21 S&P 500 companies on Thursday, including Microsoft Corp and Starbucks Corp after the close.
Thomson Reuters data through Thursday morning shows earnings for the fourth quarter are expected to grow 7 percent. Of the 102 companies in the benchmark that have reported, 63 percent beat expectations, in line with the long-term average.
The Dow Jones industrial average fell 203.67 points or 1.24 percent, to 16,169.67, the S&P 500 lost 21.09 points or 1.14 percent, to 1,823.77 and the Nasdaq Composite dropped 41.439 points or 0.98 percent, to 4,201.561.
Offshore drilling contractor Noble Corp slumped 9 percent to $32.98 as the worst performer on the S&P 500 after saying Wednesday that rig utilization was expected to drop this year.
Shares of Herbalife fell 13.4 percent to $63.69 in heavy volume after Massachusetts Senator Edward Markey asked for more information about its business practices. The nutrition company has been accused by prominent hedge fund manager William Ackman of running a pyramid scheme.
Transportation stocks, a barometer of economic confidence, hit a record but later gave up those gains. The Dow transports index was top-heavy on Thursday, with gains concentrated in four components in positive territory. It was down 0.2 percent.
The sector was buoyed by Union Pacific Corp and railcar leasing company Gatx Corp. UNP gained 3.5 percent to $174.35 after it reported a bigger quarterly profit, while Gatx jumped 10.5 percent to $57.27 after posting earnings, announcing a $250 million buyback plan and boosting its dividend.