U.S. stocks plunge capping off worst week since March
U.S. stocks plunged, capping the worst week for the S&P 500 Index since March, as the Trump administration pressed its trade war with China and the latest batch of economic data added to concern that growth has peaked. Oil rose after OPEC agreed to cut output.
The Dow Jones Industrial Average shed over 500 points Friday, bringing its decline in the abbreviated trading week to over 1,000. The S&P finished the week down 4.6 percent. The trade outlook appeared to take a negative turn after Huawei Technologies’s chief financial officer was charged with conspiracy and the U.S. alleged the company violated sanctions. The Federal Reserve’s Lael Brainard struck a hawkish tone in comments at a conference.
“What we think is going on is a repricing of growth,” said Ernie Cecilia, chief investment officer at Bryn Mawr Trust Co. “The bond market is essentially saying we don’t see the kind of growth that we’ve had. So what the market is doing is repricing stocks, particularly those that have performed extraordinarily well, to a lower growth rate.”
Stocks had opened higher after the November jobs report showed moderation in the labor market, giving succor to proponents for a slower pace of Fed interestrate increases. Treasuries fluctuated on the data before settling higher as risk aversion increased. The dollar fell.
U.S. payrolls and wages rose by less than forecast in November while the unemployment rate held at the lowest in almost five decades. The report comes with financial markets on edge over whether Fed Chair Jerome Powell is closer to pausing. Marketimplied U.S. rate expectations have been sinking amid the tumult in equities, but hawkish views still exist among Fed officials, including Powell and Brainard.
In Europe, stocks rebounded from the worst day in more than two years, while Asian shares posted modest gains as investors sought to end a bruising week on a more upbeat note. The pound edged lower even after U.K. Prime Minister Theresa May was said to be weighing a plan to postpone the vote on her Brexit deal.