Rising global growth fears pull down Wall Street

(Reuters) – U.S. stocks fell 0.8 percent on Friday, as weak economic data from China and Europe exacerbated global growth fears and added to nerves about the U.S.-China trade talks.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., December 11, 2018. REUTERS/Brendan McDermid

Weak monthly retail sales growth and industrial output numbers from China, combined with sluggish Euro zone business expansion as well as disappointing economic data from France and Germany, weighed on sentiment.

Investors also shrugged off news Beijing would suspend additional tariffs on U.S.-made vehicles and auto parts for three months starting Jan. 1 and data that core U.S. retail sales accelerated in November.

“Focus has shifted from just the U.S.-China trade war to what’s going on in the global economy and what that means for earnings for the U.S. corporations in the 2019,” said Art Hogan, chief market strategist at B. Riley FBR in New York.

“When you have slowdown in both China and Europe, whether they are related or not, it will impact the sales of S&P 500 companies.”

The so-called FAANG group of high-growth, technology-focused stocks declined, with Facebook Inc (FB.O), Inc (AMZN.O), Apple Inc (AAPL.O), Netflix Inc (NFLX.O) and Alphabet Inc (GOOGL.O) dropping between 1.38 percent and 2.14 percent.

Johnson & Johnson (JNJ.N) tumbled 4.0 percent after Reuters reported the company knew for decades that asbestos lurked in its Baby Powder.

The stock was the biggest drag on the S&P 500 and Dow Industrials.

Losses were broad-based and was led by technology .SPLRCT and healthcare sectors .SPXHC, which fell over 1.5 percent.

The communication services .SPLRCS, consumer staples .SPLRCR and consumer discretionary .SPLRCD shed about 1 percent each.

At 9:52 a.m. ET, the Dow Jones Industrial Average .DJI was down 209.66 points, or 0.85 percent, at 24,387.72. The S&P 500 .SPX was down 21.82 points, or 0.82 percent, at 2,628.72 and the Nasdaq Composite .IXIC was down 82.76 points, or 1.17 percent, at 6,987.58.

Deepening the gloom, a Reuters poll showed that the risk of a U.S. recession in the next two years has risen to 40 percent, while expectations of interest rate hikes by the Federal Reserve has slumped for 2019.

Trading has been volatile this week and the market has failed to hold on to its opening levels in magnitude or direction for the full session on concerns ranging from U.S.-China trade talks, interest rates, a flattening U.S. Treasury yield curve to uncertainty about Brexit.

Walgreens Boots Alliance Inc (WBA.O) was another healthcare stock that declined, down 3.3 percent, after Goldman Sachs downgraded the drugstore owner’s shares.

Cisco Systems Inc (CSCO.O) slipped 3 percent after Instinet moved to sidelines on the company’s stock, citing weak IT spending in 2019.

Costco Wholesale Corp (COST.O) dropped 5.82 percent after the warehouse club retailer reported a fall in quarterly gross margin.

Declining issues outnumbered advancers for a 2.33-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 2.01-to-1 ratio on the Nasdaq.

The S&P index recorded six new 52-week highs and 61 new lows, while the Nasdaq recorded one new highs and 244 new lows.

Reporting by Medha Singh in Bengaluru; Editing by Sriraj Kalluvila

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