Stocks drop again to worst loss in weeks on economy worries | TribLIVE.com
U.S./World

Stocks drop again to worst loss in weeks on economy worries

Associated Press
1754260_web1_1754260-fc269e95d92c4616a31beccc3c5f4a5c
AP
Trader Sal Suarino works on the floor of the New York Stock Exchange on Wednesday, Oct. 2, 2019.

NEW YORK — Stocks tumbled again on Wednesday as worries about a weakening global economy boomeranged around the world.

For a second straight day, the S&P 500 dropped to its worst loss in five weeks. The latest wave of selling came after a report showed hiring by U.S. companies slowed more than economists expected last month, with mining and manufacturing particularly weak. It added to worries that shook markets a day earlier, when a reading on U.S. manufacturing growth dropped to its worst level in a decade.

The reports underscored that President Trump’s trade war with China is continuing to drag on exports and raised the worry that the weakness could spill over into other areas of the economy. It sent markets around the world reeling, with losses sweeping from the United States on Tuesday into Asia and through Europe on Wednesday.

The S&P 500 lost 52.64 points, or 1.8%, to 2,887.61. It was the first back-to-back loss for the index of more than 1% since late last year, when fears about a possible recession seized markets.

The Dow Jones Industrial Average fell 494.42, or 1.9%, to 26,078.62, and the Nasdaq composite dropped 123.44, or 1.6%, to 7,785.25.

Adding to the market’s uncertainty was a ruling by the World Trade Organization that cleared the United States to impose tariffs on up to $7.5 billion of goods from the European Union to make up for illegal subsidies given to plane-maker Airbus.

Even investors who are optimistic that the U.S. economy isn’t facing an imminent recession were struck by Tuesday’s surprisingly weak manufacturing report.

“Manufacturing, that data point does give me further pause,” said Adrian Helfert, director of multi-asset portfolios at Westwood.

The weakness means an even brighter spotlight on the federal government’s more comprehensive report on the jobs market, which is scheduled for Friday. It measures hiring across the economy, and economists expect it to show an acceleration in hiring last month.

“We still are a consumption-led economy,” Helfert said. “I’m watching that very closely. I am looking for that virtuous cycle.”

If hiring remains strong, it would support what’s been the stalwart of the economy despite the trade war: healthy consumer spending. If households continue to spend, it can lead to a cycle where stronger sales for companies push them to invest more in their businesses, which creates more jobs and leads to even more consumer spending.

Another report that could move markets is Thursday’s reading on the U.S. service sector. Further down the calendar, U.S. and Chinese envoys are expected to discuss their trade disputes next week, and markets have been quick to move on any hint of the chances of a possible deal between the world’s largest economies.

But the weaker-than-expected reports so far this week have rattled investors.

Prices fell across the stock market Wednesday, and all 11 sectors that make up the S&P 500 lost ground from stodgy utilities to go-go technology companies. Roughly seven stocks fell for every two that rose on the New York Stock Exchange.

In search of safety, investors piled into U.S. government bonds and sent yields sliding for a second straight day. Gold also rose, while oil sank after a report showed that the amount of crude supplies in inventories swelled last week.

Investors also increased their bets that the Federal Reserve will slash interest rates at its next meeting to shield the economy from slowing growth abroad and the effects of the trade war.

Markets are pricing in a 75% probability that the Fed will cut short-term rates by half a percentage point at its Oct. 29-30 meeting. A week ago, markets were seeing it closer to a coin flip’s chance. The Fed hasn’t cut rates by that large a margin since the financial system was melting down in 2008.

Financial stocks were laggards Wednesday as bond yields continued to slide. Lower interest rates can crimp the profits banks make from lending, and the yield on the 10-year Treasury fell to 1.60% from 1.64% late Tuesday.

European markets also dropped more than U.S. indexes, with Germany’s DAX losing 2.8%, France’s CAC 40 dropping 3.1% and the FTSE 100 in London down 3.2%.

Japan’s Nikkei 225 slipped 0.5%, South Korea’s Kospi fell 2% and the Hang Seng in Hong Kong dipped 0.2%.

Benchmark crude oil fell 98 cents to settle at $52.64 a barrel. Brent crude oil, the international standard, fell $1.20 to close at $57.69 a barrel. Wholesale gasoline fell 2 cents to $1.55 per gallon. Heating oil declined 3 cents to $1.87 per gallon. Natural gas fell 3 cents to $2.25 per 1,000 cubic feet.

Gold rose $19.00 to $1,501.00 per ounce, silver rose 39 cents to $17.59 per ounce and copper rose 1 cent to $2.56 per pound.

The dollar fell to 107.22 Japanese yen from 107.73 yen on Tuesday. The euro strengthened to $1.0958 from $1.0936.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.