Stocks slide to 8-month lows
Johnson & Johnson’s market value tumbles $40 billion. Dow goes into correction.
Stocks slid to eightmonth lows Friday after weak economic data from China and Europe set off more worries about the global economy. Tensions in Europe over Britain’s impending departure from the European Union also darkened traders’ moods.
On the Standard & Poor’s 500 index, healthcare and technology companies posted the worst losses.
Johnson & Johnson had its biggest one-day drop in 16 years after Reuters reported that the company has known since the 1970s that its talc baby powder sometimes contained carcinogenic asbestos. The company denied the report.
The S&P 500 index fell 50.59 points, or 1.9%, to 2,599.95, its lowest close since April 2. The Dow Jones industrial average slid 496.87 points, or 2%, to 24,100.51. The Dow has fallen 10% from its record high in early October, reaching a mark known as a correction. The other major U.S. indexes were already in corrections.
The Nasdaq composite sank 159.67 points, or 2.3%, to 6,910.66. The Russell 2000 index fell 21.89 points, or 1.5%, to 1,410.81.
December is typically the best month of the year for stocks. With 10 trading days left this month, however, the S&P 500 is down 5.8%. That followed a small gain in November and a steep 6.9% drop in October.
China said its industrial output and retail sales both slowed in November. That could be another sign the U.S.-China trade war and tighter lending conditions are chilling China’s economy. Meanwhile, purchasing managers in Europe signaled that economic growth was slipping.
Sameer Samana, senior global market strategist for Wells Fargo Investment Institute, said investors are concerned that weakness will make its way to the United States. They’re wondering if the U.S. economy is likely to run out of steam sooner than they’d thought.
Rising interest rates and tighter credit conditions are adding to investors’ nervousness because they tend to slow economic growth. This week the European Central Bank said it is ending a bond-buying program. The Federal Reserve is expected to raise U.S. interest rates again Wednesday and may shed light on whether it plans rate hikes in 2019.
Johnson & Johnson dropped 10% to $133 in very heavy trading. Its market value fell by $40 billion.
Reuters reported that court documents and test results show that Johnson & Johnson has long known its raw talc and finished baby powder sometimes contained asbestos, but that the company didn’t tell regulators or the public. The company called the story “false and inflammatory.”
In July, Johnson & Johnson lost a suit from plaintiffs who argued that its products were linked to cases of ovarian cancer and mesothelioma. A St. Louis jury awarded plaintiffs $4.7 billion. The firm faces thousands of additional lawsuits.
Among tech companies, Apple slid 3.2% to $165.48. Adobe skidded 7.3% to $230 after it posted disappointing fourth-quarter profit and forecast lower-than-expected earnings in the current fiscal year. Industrial firms sank too. Boeing fell 2.1% to $318.75.
Bond prices edged up. The yield on the 10-year Treasury note fell to 2.89% from 2.90%.
Oil prices fell, as a slower global economy would weaken demand for fuels. Benchmark U.S. crude slid 2.6% to $51.20 a barrel. Brent crude fell 1.9% to $60.28 a barrel. Wholesale gasoline fell 3% to $1.43 a gallon. Heating oil fell 1.7% to $1.85 a gallon. Natural gas dived 7.2% to $3.83 per 1,000 cubic feet.