US stocks on Friday closed lower after a shortened session, bumping the benchmark S&P 500 into a correction, or a drop of 10 percent less than its most recent all-time high in September.
Energy companies led the market slide as the price of US crude oil tumbled to its lowest level in more than a year, reflecting worries among traders that a slowing global economy could hurt demand for oil.
“Oil is really falling sharply, continuing its downward descent, and that appears to be giving investors a lot of concern that there’s slowing global growth,” US Bank Private Wealth Management regional investment director Jeff Kravetz said. “You have that, and then you have the recent sell-off in tech and in retail, and then throw on there trade tensions and rising rates.”
Losses in technology and Internet companies and banks outweighed gains in healthcare and household goods stocks.
Several big retailers declined as investors monitored Black Friday for signs of a strong holiday shopping season.
Trading volume was lighter than usual, with the markets open for only a half day after the Thanksgiving holiday.
The S&P 500 on Friday fell 17.37 points, or 0.7 percent, to 2,632.56, dropping 3.8 percent from a close of 2,736.27 on Nov. 16.
The index is now down 10.2 percent from its last all-time high set on Sept. 20. The last time the index entered a correction was in February.
The latest correction came as investors worry that corporate profits, a key driver of stock market gains, could weaken next year.
“The market is repricing and trying to assess where we’re going to be in the early part of 2019,” Prudential Financial Inc chief market strategist Quincy Krosby said.
The Dow Jones Industrial Average on Friday lost 178.74 points, or 0.7 percent, to 24,285.95, plunging 4.4 percent from 25,413.22 a week earlier.
The NASDAQ composite on Friday dropped 33.27 points, or 0.5 percent, to 6,938.98, diving 4.3 percent from a close of 7,247.87 on Nov. 16.
The Russell 2000 index of smaller-company stocks on Friday picked up 0.40 points, or 0.03 percent, to 1,488.68, a fall of 2.5 percent from 1,527.53 a week earlier.
Crude prices fell for the seventh straight week on worries that a slowing global economy could hurt demand even as oil production has been increasing.
Saudi Arabia and other OPEC members have signaled a willingness to consider production cuts at the oil cartel’s meeting next month.
However, the US has been increasing pressure on Saudi Arabia and OPEC to not cut production, a move which could push prices down further.
The slide in oil prices weighed on energy stocks.
Concho Resources Inc, a developer and explorer of oil and natural gas properties, slumped 6.3 percent to US$126.96.
Tesla Inc fell 3.7 percent to US$325.83 after the electric car maker said it intends to cut prices for its Model X and Model S cars in China to make them more affordable.
Traders had their eye on retailers as Black Friday, the traditional start to the crucial holiday shopping season, began.
Shares in L Brands Inc, operator of Victoria’s Secret and Bath & Body Works, added 2 percent to US$29.97.
However, other retailers put investors in a selling mood.
Kohl’s Corp fell 3.7 percent to US$63.83, while Target Corp lost 2.8 percent to US$67.35. Macy’s dropped 1.8 percent to US$32.01.
Rockwell Collins Inc climbed 9.2 percent to US$141.63 after Chinese regulators conditionally approved the sale of the maker of communications and aviation electronics systems to United Technologies Corp.
Investors will be watching next week when Chinese President Xi Jinping (習近平) and US President Donald Trump meet at the G20 summit in Argentina for signs that the two leaders can find common ground to begin unwinding the spiraling trade dispute.
The dispute between the US and China has weighed on the market, stoking traders’ worries that billions of dollars in escalating tariffs imposed by both countries on each other’s goods will hurt corporate earnings at a time when the global economy appears to be slowing.
“If you can get President Trump and President Xi to even just come closer with their rhetoric and make a bit of progress on the trade front, that could be the catalyst for markets to move higher,” Kravetz said.
It might take more than one meeting to work out deep-seated issues between Washington and Beijing, which resumed talks over their trade dispute earlier this month.
Additional reporting by staff writer
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