Stocks fell sharply on Friday after weaker-than-expected data in China and Europe exacerbated concerns of a global economic slowdown.
The Dow Jones Industrial Average fell 391 points, led lower by declines in Apple and Johnson & Johnson. The S&P 500 dropped 1.4 percent as the consumer staples and health care sectors lagged. The Nasdaq Composite pulled back 1.4 percent. Friday’s losses wiped out the gains for the week.
China reported industrial output and retail sales growth numbers for November that missed expectations. This is the latest sign shown by China that its economy may be slowing down. The data also underscored the rising risks to China’s economy as Beijing works to resolve an ongoing trade war with the U.S.
“The economic data continues to bear out growth is slowing,” said Tom Martin, senior portfolio manager at Globalt. “There is still a lot of positive positioning out there. As the data continues to slow, people are feel less comfortable with that and start to sell.”
“Where we are is trying to measure how uncomfortable people are with their positioning,” Martin said. “There just hasn’t been any follow-through in any rally we’ve seen in the past few weeks. That’s very telling of the market.”
Industrial production in China grew by 5.4 percent for November on a year-over-year basis, the slowest pace in almost three years. Retail sales, meanwhile, grew at their slowest rate since 2003.
European shares also fell after the release of weaker-than-forecast data. The IHS Markit Flash Eurozone PMI index fell to 51.7 in December, its lowest level in four years. “New business inflows almost stalled, job creation slipped to a two-year low and business optimism deteriorated,” IHS Markit said in a release. The Stoxx 600 index, which tracks a broad swath of European stocks, fell 0.3 percent.
Friday’s moves come after U.S. equities seesawed in the previous session. The Dow closed slightly higher, while the S&P 500 and Nasdaq Composite fell slightly.
Stocks initially surged this week amid hopes the U.S. and China would be able to strike a permanent deal on trade. On Friday, China said it would suspend an additional tariff on U.S. autos. China also confirmed it would reduce a 40 percent charge on U.S. auto imports to 15 percent for 90 days.
But the uncertainty around the ongoing negotiations has kept investors on edge recently. Data from research service Lipper found that more than $46 billion were pulled out in a week from U.S. stock mutual funds and ETFs, the most ever.
“At this point, a lot of investors are very cautious heading into 2019,” said Yousef Abbasi, director of U.S. institutional equities at INTL FCStone. “There’s a lot of frustration among investors that have been whipsawed by this volatility.”
Shares of Apple fell 2.3 percent after influential analyst Ming-Chi Kuo, of TF International Securities, slashed his iPhone shipment estimates by 20 percent.
Johnson & Johnson, another Dow member, fell more than 9 percent after Reuters reported the company knew about asbestos in its baby powder for decades.