Stocks, bond yields fall sharply as growth worries spread

Wall Street was roiled Friday by new signs that global economic growth is slowing. The jitters triggered a sell-off in stocks and sent bond yields sharply lower, flashing a possible recession warning.

The wave of selling knocked 460 points off the Dow Jones Industrial Average and gave the benchmark S&P 500 index its worst day since Jan. 3. The Russell 2000 index of smaller company stocks fell more than the rest of the market as traders offloaded riskier assets.

Worried investors shifted money into bonds, which sent yields much lower. The yield on the 10-year Treasury dropped to 2.43 percent from 2.54 percent late Thursday, a big move.

The slide in bond yields hurt bank stocks which, along with technology companies, accounted for much of the broad decline in stocks. The utilities sector was the only one to eke out a gain.

“What's really giving investors concern today is this weak global economic data here in the U.S. and in Europe,” said Jeff Kravetz, regional investment director for U.S. Bank Wealth Management.

Smaller company stocks are often the first to be sold by investors looking to reduce risk, which explains why the Russell 2000 was down more than the rest of the market. Small companies, which are more dependent on the U.S. economy than big multinationals, tend to suffer more in economic downturns.

“When investors feel nervous about the economy and the outlook for the stock market, they want to sell the riskiest types of stocks, and that would definitely be small

caps,” Kravetz said.

The S& P 500 index dropped 54.17 points, or 1.9 percent, to 2,800.71. The Dow gave up 460.19 points, or 1.8 percent, to 25,502.32.

The Nasdaq composite, which is heavily weighted with technology stocks, slid 196.29 points, or 2.5 percent, to 7,642.67. The Russell 2000 lost 56.49

points, or 3.6 percent, to 1,505.92.

European stocks also finished sharply lower Friday.

Despite wavering from gains to losses throughout the week, the S& P 500 index is still up more than 11 percent so far in 2019, which still counts as a blockbuster start to a year.

The fear that gripped investors Friday was fueled by a steadily dimming outlook for the global economy. China, the world's

second-largest economy after the United States, is weakening. And other economies that depend heavily on purchases in China have suffered as a result.

Factory production in the euro currency alliance, for instance, has fallen at its steepest rate in about six years. In Germany, Europe's largest economy, a survey of purchasing manager manufacturers posted its sharpest production drop in nearly six years. Orders to German factories have

also tumbled.

Key bond yields fell this week to their lowest levels in more than a year after the Federal Reserve said it was seeing slower growth in the economy and no longer expected to raise interest rates this year.

The yield on the benchmark 10-year Treasury note, which is used to set rates on mortgages and many other kinds of loans, is now sharply lower from its recent high of 3.23 percent in early October.