Stocks tumble on global growth fears
US stocks fell sharply on Friday, 14 December 2018 ending the week on a bleak note and sending the Dow Jones Industrial Average into correction territory after a batch of weaker-than-expected economic data out of China and Europe sparked fresh worries about the state of the world's second-biggest economy and prospects for global growth. Investors, meanwhile, appeared to take little solace in strong U.S. retail sales data.
The Dow fell 496.87 points, or 2%, to end at 24,100.51. The S&P 500 index shed 50.59 points, or 1.9%, to close at 2,599.95. The Nasdaq Composite dropped 58.59 points, or 0.8%, to finish at 6,910.66.
Fresh evidence that global trade tensions are hitting the world's second-biggest economy emerged on Friday, as China released data that showed both industrial output and retail sales for November missed economists' forecasts. China's National Bureau of Statistics attempted to cool concerns, saying the economy performed within the reasonable range. Economic data out of Europe was no more encouraging, after IHS Markit's purchasing manager's index, released Friday, showed the German and French private sectors slowing sharply in November.
Johnson & Johnson was the Dow's biggest loser Friday, with shares tumbling 10%, after a report alleged the company knew for decades that its baby talcum powder was sometimes contaminated with the carcinogen asbestos. Shares of Costco fell 8.6%, after a Thursday evening earnings release showed the retailer missed revenue expectations for the fiscal first quarter.
The ICE U.S. Dollar Index, a measure of the U.S. currency against a basket of six major rivals, rose 0.4%. A stronger U.S. unit is seen as a headwind for commodities priced in dollars as it makes them more expensive to users of other currencies.
U.S. data released Friday was solid, with November retail sales showing the holiday season got off to a strong start. Industrial production was up 0.6% in November, posting the strongest gain in three months. The flash reading of the U.S. manufacturing purchasing managers index, however, fell to a 13-month low of 53.9 in December.
The softer data was blamed for a weak tone across global equity markets, with U.S. benchmark stock indexes moving broadly lower on Wall Street. The dollar, meanwhile, was seen as a beneficiary, rising solidly versus most major rivals.
China's business activity mostly slowed in November, with industrial output showing a weaker-than-expected year-over-year rise of 5.4% in November after a 5.9% rise in October. Retail sales rose 8.1% year-over-year versus 8.6% in October, also coming in below expectations.
Bullion prices ended lower at Comex on Friday, 14 December 2018. A round of weaker-than-expected Chinese economic data spooked global investors on Friday, but failed to provide a lift for gold thanks to a stronger U.S. dollar.
Gold for February delivery on Comex lost $6, or 0.5%, to settle at $1,241.40 an ounce, the lowest finish since 3 December 2018. It ended down 0.9% for the week. March silver fell 21.8 cents, or 1.5%, to $14.637 an ounce, with prices settling around 0.4% lower on the week.
The ICE U.S. Dollar Index, a measure of the U.S. currency against a basket of six major rivals, rose 0.4%. A stronger U.S. unit is seen as a headwind for commodities priced in dollars as it makes them more expensive to users of other currencies.
Oil prices fell on Friday, 14 December 2018 settling lower for the week, as a stronger dollar cut global demand for U.S.-priced commodities and a slide for the stock market sullied the risk-taking mood. Meanwhile, natural-gas futures took a plunge that left them down nearly 15% for the week the largest such loss in nearly three years, as weather forecasts dulled prospects for demand.
Oil prices had climbed on Thursday as traders contemplated data showing a blip higher in monthly OPEC output even as future cuts loom, as well as a recent report of a weekly decline in U.S. crude supplies and production. Gains picked up late Thursday after a news report said Saudi Arabia plans to cut shipments to U.S. refiners to avoid an expansion of U.S. stockpiles.
On Friday, West Texas Intermediate crude for January delivery fell $1.38, or 2.6%, to settle at $51.20 a barrel on the New York Mercantile Exchange. The contract was down 2.7% for the week. Global benchmark February Brent crude fell $1.17, or 1.9%, to $60.28 a barrel on ICE Futures Europe, down about 2.3% for the week.
Investors sought safety in U.S. Treasuries, pushing yields lower across the curve. The 2-yr yield lost three basis points to 2.73%, and the 10-yr yield lost two basis points to 2.89%. Also, the U.S. Dollar Index rose 0.4% to 97.45, nearing a yearly high.
Looking ahead, investors will receive the NAHB Housing Market Index for December, the Empire State Manufacturing Survey for December, and Net Long-Term TIC Flows for October on Monday.
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