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Stocks lower on worries over China slowdown
NEW YORK (AP) — Signs that China’s economy is weakening and Europe’s is slowing hurt U.S. stock prices Thursday.
The Dow Jones industrial average was down 74 points to 13,050 in midafternoon trading. The Standard & Poor’s 500 index fell 10 points to 1,392, while the Nasdaq composite fell 14 points to 3,061.
Nine out of 10 sectors fell in the S&P 500, led by energy and materials.
The disconcerting news from overseas Thursday overshadowed reports showing the U.S. economy is gaining momentum.
China recently released a string of worrisome reports, the latest on Thursday, signaling that its manufacturing sector is contracting. A manufacturing index compiled by HSBC fell to 48.1 in March from 49.6 in February. Figures below 50 indicate that manufacturing is contracting.
That’s a negative sign because growth in China has played a key role in shoring up the global economy since the financial crisis of 2008.
China is also the world’s largest consumer of raw materials, so a slowdown there would affect those companies. United States Steel Corp. fell 4 percent, and copper wire and bar manufacturer Freeport-McMoRan Copper Gold Inc. lost 3.5 percent.
It didn’t help that another survey in Europe also showed signs that the economy there was also slowing. The purchasing managers’ index from Markit, a financial information company, fell to a below-forecast 48.8 points in March from 49.3 a month earlier. The index combines both the services and manufacturing sectors.
Those signs of a slowdown in key global markets dwarfed the latest positive news on the U.S. economy. The number of Americans seeking unemployment benefits fell 5,000 to a four-year low last week, bolstering the view that the job market is strengthening. A measure of future U.S. economic activity, the Conference Board’s index of leading economic indicators, rose 0.7 percent in February for the fifth straight month, more evidence that the economy is gaining momentum.
The poor economic news from abroad also hurt FedEx Corp.’s stock, which fell 4 percent. Chief Financial Officer Alan Graf said the current economic environment and higher fuel prices are driving more customers to “trade down” or choose slower methods of shipping to save money, just as they did during the recession.
Investors decided to focus on Mr. Graf’s comments, rather than the company’s stellar performance. FedEx’s quarterly profit more than doubled between December and February after it shipped more packages and charged higher prices.
Oil prices dropped 2.4 percent to their lowest level in a week after the reports of a possible global slowdown. That hurt oil stocks: Alpha Natural Resources, Consol Energy, Cabot Oil & Gas Corp. and Halliburton were all down 4 percent.
While news out of China has been bad for stocks, it may provide some relief to consumers with oil prices falling. Gasoline has risen 59 cents per gallon since Jan. 1, and the average price nationwide is above $4 in at least eight states, plus the District of Columbia.
It was a good day for IPOs. Payment processor Vantiv Inc. soared 17 percent in its first day of trading on the New York Stock Exchange, while email marketer ExactTarget Inc. rocketed up 30 percent on its first day of trading.
In other corporate news:
- Apple wins facial recognition patent for iPhone 6
- Xbox One, Playstation 4 games penalize users for cursing in their own homes
- Allen West warns Obamas backdoor gun control is moving forward
- Inside China: Nuclear submarines capable of widespread attack on U.S.
- Kill team: Obama war chiefs widen drone death zones
- Susan Rice slams Russia, China on human rights
- Obamas call to close Vatican embassy is 'slap in the face' to Roman Catholics
- Inside the Ring: China targeting U.S. spy flights
- U.S. debt jumps a record $328 billion tops $17 trillion for first time
- Obama: Growing income inequality 'defining challenge' of this generation
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