Today's Paper Search Latest stories Listen Traffic Legislature Newsletters Most commented Obits Weather Puzzles + Games
ADVERTISEMENT
ADVERTISEMENT
story.lead_photo.caption In this Tuesday, Jan. 29, 2019, file photo specialist Specialist Glenn Carell, center, and trader John Panin work on the floor of the New York Stock Exchange. (AP Photo/Richard Drew, File)

Renewed pessimism about the strength of the global economy and corporate profits this year led to sharp losses Thursday on Wall Street.

The S&P 500 fell 25.56 points, or 0.9 percent, to 2,706.05. The Dow Jones industrial average lost 220.77 points, or 0.9 percent, to 25,169.53. The Dow was briefly down 389 points.

The Nasdaq composite slid 86.93 points, or 1.2 percent, to 7,288.35. The Russell 2000 index of smaller companies gave up 12.40 points, or 0.8 percent, to 1,505.63.

Technology companies, health care stocks and banks accounted for much of the selling. Twitter slumped almost 10 percent after issuing a weak forecast. Traders sought safety in U.S. government bonds, sending yields lower.

The broad sell-off followed a slide in overseas markets after European officials slashed their forecast for economic growth this year in the 19 countries that use the euro and the Bank of England warned that the British economy is set for its weakest growth in a decade.

The moves are the latest flash points 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, riding a wave of positive momentum after the Federal Reserve signaled it would be take a more patient approach to raising interest rates. Corporate earnings, which have mostly come in ahead of lowered expectations, also helped lift the market this month, carrying the S&P 500 index to a five-day winning streak that ended Wednesday.

"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 of Globalt Investments.

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 percent from an earlier forecast of 1.9 percent. A weaker-than-expected report on industrial production in Germany also raised concerns.

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.

Across the S&P 500, analysts are forecasting earnings per share to drop 1.8 percent in the first quarter from a year earlier. They were calling for growth just a few weeks ago, and if the updated forecasts prove true, it will be the first decline in nearly three years.

Any decline would also be a sharp drop-off from the 12.9 percent growth that S&P 500 companies are expected to report for the quarter of 2018.

"Is it going to be a one-quarter kind of fluke?" said Martin. "That's what's embedded in analysts' estimates. Or is it going to be a multiquarter, maybe multiyear phenomenon like it was in 2015 and 2016?"

Dunkin' Brands fell 3 percent after the doughnuts chain gave 2019 guidance that fell short of what analysts were expecting.

Shares in Tapestry tumbled 14.8 percent after the owner of Kate Spade, Coach and other luxury apparel brands reported quarterly earnings and revenue that missed Wall Street's estimates.

Information for this article was contributed by Annabelle Liang and Stan Choe of The Associated Press.

Business on 02/08/2019

Print Headline: Stocks drop on economic worries

ADVERTISEMENT

Sponsor Content

Comments

You must be signed in to post comments
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT