First down week since January for S&P 500 as unease spreads
Another wave of selling on Wall Street Friday left the S&P 500 with its worst weekly showing since January and its eighth loss in the last nine days.
The sell-off, which lost some strength toward the end of the day, followed a surprisingly weak jobs report and more signs that the global economy is hitting the brakes. On Friday a report showed Chinese exports plunged 20 percent last month, far more than economists expected. On Thursday, Europe’s central bank said it was doing a policy reversal and restoring measures to shore up that region’s economy.
Energy stocks led the market’s slide as crude oil prices declined. Health care companies and retailers also pulled the market lower. Most homebuilders rose following a big jump in January housing starts.
The U.S. jobs report is the latest batch of discouraging economic news to give investors a reason to sell and pocket some of their recent gains as they wait for the next positive headline or economic data to pave the way for stocks to move higher again, said Mark Watkins, regional investment strategist at U.S. Bank Wealth Management.
“We’ve had a very solid run and there are investors who are going to be taking a little bit of money off the table,” Watkins said.
The S&P 500 dropped 5.86 points, or 0.2 percent, to 2,743.07. The benchmark index has fallen five days in a row, its longest losing streak in nearly four months.
The Dow Jones Industrial Average lost 22.99 points, or 0.1 percent, to 25,450.24. The average briefly fell more than 220 points.
The Nasdaq composite declined 13.32 points, or 0.2 percent, to 7,408.14. The Russell 2000 index of smaller companies gave up 1.74 points, or 0.1 percent, to 1,521.88. Major European indexes closed lower. The market’s momentum has stalled this week after enjoying a sharp bounce back at the start of this year. This week’s losses for the S&P 500 are the worst since December, but not as severe as they were then, when worries were peaking about a slowing global economy and that interest rates may rise too quickly. Since then, the Federal Reserve helped calm some of the worries by pledging to be patient in raising rates.
Still, investors are feeling increasingly uneasy about the global economy. The Organisation for Economic Co-operation and Development said this week that it expects global growth to be 3.3 percent this year, down from the 3.5 percent that it had forecast just four months ago.
The OECD said economic prospects are weaker in nearly all the countries that make up the G20 than previously expected, and it cited a slowdown in trade and global manufacturing, among other reasons. The United States and China have been locked in a particularly tense trade dispute, though the countries say they’re making progress in negotiations.
Analysts are debating whether the U.S. stock market’s latest moves are the last gasps for the longest bull market on record for U.S. stocks, which began 10 years ago this weekend, or just the latest challenge for it muddle through.
“Right now, the U.S. economy is gradually slowing, and earnings are trending a little bit lower,” Watkins said. “Any news that has been coming out that hasn’t been that strong has been a little bit of a negative catalyst for the market to have a reason to move back just a little bit.”
The strong U.S. labor market has been a major pillar of support for the stock market’s run in recent years, but Friday’s jobs report was surprisingly bad.
Employers added just 20,000 jobs last month, when economists were expecting something closer to 180,000. Last month’s job growth was also a sharp slowdown from January’s 311,000, a number that the government revised higher on Friday.
A slower global economy wouldn’t need as much oil, and the price of crude sank Friday along with expectations for demand. Benchmark U.S. crude fell 1 percent to settle at $56.07 per barrel. Brent crude, the international standard, lost 0.8 percent to close at $65.74 per barrel.
The sharp decline sent energy companies to double the loss of any of the other 10 sectors that make up the S&P 500. They ended 2 percent lower.
Also hurting the sector was a decision by Norway’s $1 trillion wealth fund to dump shares in some oil and gas companies. The move would exclude companies that operate solely in exploration or production, but it will continue to own the biggest companies in the energy industry.
Noble Energy and EOG Resources tumbled 5.4 percent.
New U.S. residential construction data gave traders reason to be more optimistic about homebuilder stocks.