Global-growth fears spin stocks to 8-month lows

FILE- In this Nov. 29, 2018, file photo trader Timothy Nick works on the floor of the New York Stock Exchange. The U.S. stock market opens at 9:30 a.m. EST on Friday, Dec. 14. (AP Photo/Richard Drew, File)
FILE- In this Nov. 29, 2018, file photo trader Timothy Nick works on the floor of the New York Stock Exchange. The U.S. stock market opens at 9:30 a.m. EST on Friday, Dec. 14. (AP Photo/Richard Drew, File)

NEW YORK -- Stocks staggered to eight-month lows Friday after weak economic data from China and Europe set off more worries about the global economy. Mounting tensions in Europe over Britain's impending departure from the European Union also darkened traders' moods.

The Dow Jones industrial average dropped as much as 563 points. On the benchmark S&P 500 index, health care and technology companies absorbed the worst losses. Johnson & Johnson fell by the most 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.

China said industrial output and retail sales both slowed in November. That could be another sign that China's trade dispute with the U.S. and tighter lending conditions are chilling its economy, which is the second-largest in the world. 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 U.S. They're wondering if the U.S. economy is likely to run out of steam sooner than they had thought.

"Market consensus has been that the next recession is probably in 2020 or beyond," he said. Now, he said, the market is "really testing that assumption and trying to figure out whether it's sooner."

The S&P 500 index fell 50.59 points, or 1.9 percent, to 2,599.95, its lowest close since April 2. The Dow retreated 496.87 points, or 2 percent, to 24,100.51.

The Nasdaq composite slid 159.67 points, or 2.3 percent, to 6,910.66. The Russell 2000 index of smaller-company stocks fell 21.89 points, or 1.5 percent, to 1,410.81.

According to Bloomberg data, more than half the components of the S&P 500 -- 259 companies -- are now at least 20 percent below their 52-week highs, putting them below the threshold that signifies a bear market.

Notably, Friday's decline took the S&P 500 financial sector 20 percent below a peak reached in late January.

December is typically the best month of the year for stocks and Wall Street usually looks forward to a "Santa Claus rally" that adds to the year's gains.

With 10 trading days left this month, however, the S&P 500 is down 5.8 percent. That followed a small gain in November and a steep 6.9 percent drop in October.

"People see the challenges into 2019, and it's the same litany of fundamental challenges with revenue growth, global growth, all of these questions," said Yousef Abbasi, director of U.S. institutional equities and global market strategist at INTL FCStone. "They want to see something positive, but at the same time, they're hesitant to react when it's a small positive. It almost seems like they want the whole kit and caboodle."

Johnson & Johnson shares fell 10 percent to $133 in very heavy trading. Its market value fell by $40 billion.

Reuters reported that court documents and test results show Johnson & Johnson has known for decades that its raw talc and finished Baby Powder sometimes contained asbestos, but that the company didn't inform regulators or the public. The company called the story "false and inflammatory."

In July, the company lost a lawsuit 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. Johnson & Johnson faces thousands of other lawsuits.

In Europe, the index of purchase managers fell in France, which is racked by protests, to a level that points toward economic contraction. Germany's reading still pointed to growth, but it fell to its lowest level in four years.

Those reports canceled out some potential good news on trade: the Chinese government announced a 90-day suspension of tariff increases on U.S. cars, trucks and auto imports. It's part of a trade-war truce that China and the U.S. announced earlier this month to give them time to work on other issues.

Among technology companies, Apple dipped 3.2 percent to $165.48. Adobe skidded 7.3 percent to $230 after its fourth-quarter profit disappointed investors and it also forecast lower-than-expected earnings in the current fiscal year.

Industrial companies sank as well. Boeing shares fell 2.1 percent to $318.75.

Oil prices again turned lower, as a slower global economy would weaken demand for oil and other fuels. Benchmark U.S. crude fell 2.6 percent to $51.20 a barrel in New York. Brent crude, used to price international oils, dropped 1.9 percent to settle at $60.28 a barrel in London.

The yield on the 10-year U.S. Treasury note fell to 2.89 percent from 2.90 percent.

Information for this article was contributed by Marley Jay and Josh Boak of The Associated Press and by Ryan Vlastelica, Vildana Hajric and Sarah Ponczek of Bloomberg News.

A Section on 12/15/2018

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