Wall Street’s three major indices tumbled on Friday and the Dow Jones Industrial Average confirmed a correction as weak data from China and Europe stoked fears of a global economic slowdown, while Johnson & Johnson shares were the biggest drag after Reuters reported that the company knew for decades that its Baby Powder contained asbestos.
The S&P 600 small cap index confirmed that it was in a bear market after closing 20.05 percent below its Aug. 31 peak, falling 1.6 percent on the day.
The Johnson & Johnson report, which the company has disputed, sent its shares tumbling 10 percent in heavy volume, making it the biggest weight from a single stock on the S&P 500 and the Dow Industrials.
Investors focused on global growth concerns and worried about US growth after China reported weak monthly retail sales growth and industrial output numbers as disappointing economic data were released from the eurozone.
“Weakness showing through in the Chinese economy in terms of the numbers that were reported as a result of the ongoing trade war was certainly a concern that bleeds into global growth concerns,” said Ryan Larson, head of US equity trading at RBC Global Asset Management in Chicago.
Larson also pointed to concerns about a Reuters poll of economists that found the risk of a US recession in the next two years rose to 40 percent and found a significant shift in expectations toward fewer US Federal Reserve interest rate rises next year.
The Dow Jones Industrial Average fell 496.87 points, or 2.02 percent, to 24,100.51, 10 percent below its Oct. 3 closing high.
The S&P 500 lost 50.59 points, or 1.91 percent, to 2,599.95, 11.3 percent lower than its Sept. 20 record close, marking the poorest performance for the benchmark since it fell more than 14 percent between May 2015 and January 2016.
With Friday’s close the losses inflicted by the correction were deeper than the declines suffered earlier this year.
The NASDAQ Composite dropped 159.67 points on Friday, or 2.26 percent, to 6,910.66.
For the week, the S&P fell 1.25 percent and the Dow lost 1.2 percent, while the NASDAQ shed 0.84 percent.
Johnson & Johnson on Friday helped pull down the S&P healthcare index 3.4 percent, making it the biggest percentage decliner among the S&P’s 11 major sectors.
The technology index, which includes a number of companies with global operations, especially China, dropped 2.5 percent. The energy index fell 2.4 percent.
Strong US retail sales data appeared to have little effect on markets, with the S&P retail sector falling 2.4 percent.
“Solid fundamental data that gets to the core of the US economy is overshadowed by the potential for a global slowdown washing up on our shores,” said Phil Blancato, chief executive of Ladenburg Thalmann Asset Management Inc in New York, but he said the selloff was buying opportunity.
The market struggled all week with choppy trading, on concerns ranging from US-China trade talks, interest rates and a flattening US Treasury yield curve and the shape of Brexit.
Investors appeared to shrug off Beijing’s announcement it would suspend additional tariffs on US-made vehicles and auto parts for three months starting Jan. 1.
Declining issues outnumbered advancing ones on the New York Stock Exchange by a 3.61-to-1 ratio; on NASDAQ, a 3.17-to-1 ratio favored decliners.
The S&P 500 posted nine new 52-week highs and 85 new lows; the NASDAQ Composite recorded six new highs and 425 new lows.
On US exchanges, 7.89 billion shares changed hands, compared with the 7.97 billion-share average for the past 20 sessions.
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