Slump in Chinese Manufacturing Weighs on Markets
NEW YORK – Renewed concerns about economic growth abroad – specifically Europe and China – weighed on markets on Tuesday, causing stocks to erase all of the previous day’s gains.
The Dow Jones industrial average lost 140.25 points, or 0.8 percent, to 17,750.91. The Standard & Poor’s 500 index lost 18.06 points, or 0.9 percent, to 2,063.37 and the Nasdaq composite lost 54.37 points, or 1.1 percent, to 4,763.22.
Stocks started lower and remained there most of the day, with the Dow moving down 100 to 200 points throughout the day.
The selling started in Asia, when a Chinese purchasing managers’ index for manufacturing declined to 49.4 last month from 49.7 in March. A number below 50 indicates that manufacturing is contracting. Worries about China were largely responsible for a bout of turmoil in global financial markets early this year.
Those concerns were compounded after European officials trimmed their economic growth forecasts for the 19 countries that share the euro currency, citing an unpredictable global outlook marked by political uncertainty and weakness in emerging markets.
Although Europe’s economy was surprisingly strong in the first quarter, when it regained the size it was before the 2008 financial crisis, EU Commissioner Pierre Moscovici said the recovery “remains uneven.”
“It’s a reminder that the global economy is not doing particularly well,” said Ian Winer, director of equity trading at Wedbush Securities. Winer noted the sell-off in energy and metals, most notably oil and copper, which are economically sensitive commodities that would fall if Chinese factories were to idle.
The global economic worries caused more losses for two of the hardest-hit sectors in the U.S. stock market this year: energy and banks. Energy companies in the S&P 500 slumped 2.2 percent, the most in the index, and financial stocks fell 1.3 percent.
Chevron dropped $1.99, or 2 percent, to $101.32. JPMorgan Chase lost $1.23, or 2 percent, to $62.56. Goldman Sachs fell $3.04, or 1.8 percent, to $163.14.
Pfizer jumped 90 cents, or 3 percent, to $33.70 after the company reported solid first quarter earnings that beat analysts’ estimates. Pfizer saw big sales gains in some of its newest drugs, including Lyrica and the vaccine Prevnar 13.
In energy, benchmark U.S. crude oil lost $1.13, or 2.5 percent, to close at $43.65 a barrel on the New York Mercantile Exchange. Brent crude, the international standard, fell 86 cents, or 1.9 percent, to close at $44.97 a barrel in London. In other energy trading in New York, wholesale gasoline fell 5 cents to $1.51 a gallon, heating oil fell two cents to $1.33 a gallon and natural gas rose four cents to $2.086 per 1,000 cubic feet.
U.S. government bond prices rose sharply. The yield on the 10-year Treasury note fell to 1.80 percent from 1.87 percent late Monday. The euro fell to $1.1508 from $1.1523. The dollar rose slightly to 106.47 yen from 106.45 yen.
Gold fell $4 to $1,291.80 an ounce. Silver fell 18 cents to $17.47 an ounce and copper fell 5 cents to $2.21 a pound.
The Associated Press