Stocks slid to eight-month lows Friday after weak economic data from China and Europe set off more worries about the global economy. Mounting tensions in Europe over Britain's impending departure from the European Union also darkened traders' moods.
On the benchmark Standard & Poor’s 500 index, healthcare and technology companies absorbed the worst losses.
Johnson & Johnson had its biggest one-day drop 16 years after Reuters reported that the company has known since the 1970s that its talc Baby Powder sometimes contained carcinogenic asbestos. The company denied the report.
The S&P 500 index fell 50.59 points, or 1.9%, to 2,599.95, its lowest close since April 2. The Dow Jones industrial average retreated 496.87 points, or 2%, to 24,100.51. The Dow has fallen 10% from its record high in early October, reaching a mark known on Wall Street as a correction. The other major U.S. indexes were already in corrections.
The Nasdaq composite slid 159.67 points, or 2.3%, to 6,910.66. The Russell 2000 index of smaller-company stocks fell 21.89 points, or 1.5%, to 1,410.81.
December is typically the best month of the year for stocks as a “Santa Claus rally” often adds to the year's gains. With 10 trading days left this month, however, the S&P 500 is down 5.8%. That followed a small gain in November and a steep 6.9% drop in October.
China said its industrial output and retail sales both slowed in November. That could be another sign that China's trade dispute with the United States and tighter lending conditions are chilling its economy, which is the second-largest in the world. Meanwhile, purchasing managers in Europe signaled that economic growth was slipping.
Sameer Samana, senior global market strategist for Wells Fargo Investment Institute, said investors are concerned that weakness will make its way to the United States. They're wondering if the U.S. economy is likely to run out of steam sooner than they had thought.
“Market consensus has been that the next recession is probably in 2020 or beyond,” he said. Now, he said, the market is “really testing that assumption and trying to figure out whether it's sooner.”
Rising interest rates and tighter credit conditions are adding to investors' nervousness because they tend to slow down economic growth. This week the European Central Bank said it is ending a bond-buying program that has pumped trillions of dollars into Europe's economy. The Federal Reserve is expected to increase U.S. interest rates again Wednesday, as it has been doing for the last three years, and it may also shed light on whether it plans to raise rates further in 2019.
For more than 20 years, China has been one of the biggest contributors to growth in the global economy, and when investors see signs the Chinese economy is weakening, they expect it will affect other countries — such as the United States — that sell things to China.
In Europe, the index of purchase managers fell in protest-racked France to a level that points toward economic contraction. Germany's reading still pointed to growth, but it fell to its lowest level in four years.
Those reports canceled out some potentially good news on trade: The Chinese government announced a 90-day suspension of tariff increases on U.S. cars, trucks and auto imports. It's part of a cease-fire that China and the United States announced this month to give them time to work on other issues.
In the United States, Johnson & Johnson dropped 10% to $133 in very heavy trading. Its market value fell by $40 billion.
Reuters reported that court documents and test results show that Johnson & Johnson has known for decades that its raw talc and finished Baby Powder sometimes contained asbestos, but that the company didn't inform regulators or the public. The company called the story “false and inflammatory.”
In July, Johnson & Johnson lost a lawsuit from plaintiffs who argued that its products were linked to cases of ovarian cancer and mesothelioma. A St. Louis jury awarded plaintiffs $4.7 billion. The company faces thousands of additional lawsuits.
Among tech firms, Apple slid 3.2% to $165.48. Adobe skidded 7.3% to $230 after its fourth-quarter profit disappointed investors and it forecast lower-than-expected earnings in the current fiscal year. Industrial companies sank too. Boeing fell 2.1% to $318.75.
Bond prices edged up. The yield on the 10-year Treasury note fell to 2.89% from 2.90%.
Oil prices fell again, as a slower global economy would weaken demand for fuels. Benchmark U.S. crude slid 2.6% to $51.20 a barrel in New York. Brent crude, used to price international oils, fell 1.9% to settle at $60.28 a barrel in London.
Wholesale gasoline fell 3% to $1.43 a gallon. Heating oil fell 1.7% to $1.85 a gallon and natural gas dived 7.2% to $3.83 per 1,000 cubic feet.
Gold fell 0.5% to $1,241.40 an ounce. Silver fell 1.5% to $14.64 an ounce. Copper was little changed at $2.77 a pound.
European Union leaders rejected British Prime Minister Theresa May's request to make changes to their deal covering Britain's departure from the EU on March 29. British legislators aren't satisfied with the terms May negotiated, and she canceled a scheduled vote this week because Parliament clearly wouldn't approve it. Britain's economy and financial markets across Europe face severe disruption without an agreement.
European bond prices rose and yields fell. The British pound and the euro both weakened. The pound slipped to $1.2579 from $1.2660 and the euro fell to $1.1303 from $1.1367.