Stocks slide as global economy, profit fears grow
Renewed pessimism about the strength of the global economy and corporate profits this year led to sharp losses Thursday on Wall Street.
Technology companies, healthcare stocks and banks accounted for much of the selling. Twitter slumped almost 10% after issuing a weak forecast. Traders sought safety in U.S. government bonds, sending yields lower.
The moves are the latest flashpoints of worry as investors gird for predicted slowdowns in economies around the world, including the United States, and weaker corporate earnings growth.
Stocks bounced back this year after a dismal December after the Federal Reserve signaled it would take a more patient approach to raising interest rates. Corporate earningsalso helped lift the market.
“We’ve come so far so fast that people were just looking for a chance to be able to say, ‘Yeah, that’s it. I’m going to take some money off the table,” said Tom Martin, senior portfolio manager at Globalt Investments.
The Standard & Poor’s 500 index fell 25.56 points, or 0.9%, to 2,706.05. The Dow Jones industrial average lost 220.77 points, or 0.9%, to 25,169.53.
The Nasdaq composite slid 86.93 points, or 1.2%, to 7,288.35. The Russell 2000 index of smaller companies gave up 12.40 points, or 0.8%, to 1,505.63.
U.S. indexes took their cue early Thursday from major European markets, which tumbled after the European Union’s commission slashed its 2019 forecast for economic growth in the 19 countries that use the euro to 1.3% from an earlier forecast of 1.9%.
In London, the Bank of England cut its forecast for growth this year to 1.2% from an earlier forecast of 1.7%. That would be its slowest growth since 2009. The bank said it sees a 1 in 4 chance of slipping into a recession this year.
In the U.S., a report showed that the job market remains strong as fewer Americans applied for unemployment benefits last week, a sign that layoffs are low. But many economists expect the U.S. economy to slow this year as well, along with economies around the the world.
The discouraging economic forecasts coupled with some companies lowering their 2019 earnings estimates stoked jitters across the market that earnings at U.S. companies will weaken in the first three months of this year.
“Is it going to be a onequarter kind of fluke?” Martin said. “That’s what’s embedded in analysts’ estimates. Or is it going to be a multi-quarter, maybe multiyear phenomenon like it was in 2015 and 2016?”
Dunkin’ Brands fell 3% after the doughnuts chain gave 2019 guidance that fell short of what analysts were expecting.
Tapestry shares tumbled 14.8% after the owner of Kate Spade, Coach and other luxury apparel brands reported quarterly earnings and revenue that missed Wall Street’s estimates.
The yield on the 10-year Treasury note fell to 2.66% from 2.69% late Wednesday.
The drop in the 10-year Treasury yield, which affects rates on mortgages and other consumer loans, weighed on bank shares. Wells Fargo fell 2.3%.
Benchmark U.S. crude oil dropped 2.5% to $52.64 a barrel. Natural gas slid 4.2%.
Stocks around the world have also heaved recently on concerns about U.S.-China trade tensions. U.S. Treasury Secretary Steven T. Mnuchin and trade representative Robert Lighthizer will lead a delegation to Beijing next week for the next round of trade talks, but the issues are complex.