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Stocks fall, hurt by another sign of weakness in China’s economy

Patrick Casey
Trader Patrick Casey works on the floor of the New York Stock Exchange on Monday.
(Richard Drew / Associated Press)

U.S. stocks took small losses Monday after China reported a drop in December exports — a sign of some wariness in the the market but nowhere close to the big swings that have characterized the last few months.

Indexes in Europe and Asia also fell slightly after the latest report added more evidence that China’s economy is weakening. Major U.S. indexes slid about 1% at the start of trading but soon recovered much of what they’d lost. Technology companies slumped.

Drugmakers fell after Democrats in the House of Representatives announced an investigation into prescription drug pricing. A strong quarterly report from Citigroup helped bank stocks rise.

China’s exports slipped in December, and its exports to the United States fell 3.5% as rising tariffs and broader weakness affected the world’s second-largest economy. Concerns about China’s economy and the overall global economy were a major contributor to the stock market’s plunge in late 2018.

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Mark Esposito, president of Esposito Securities, said the calm reaction to the news from China suggests stocks won’t fall further than they did in December.

“That’s a very positive sign that, at least in the short term, we may have found a bottom,” he said. “People lose faith and hope when [the market] drops 20% in a very short period like it did.”

The Standard & Poor’s 500 index dropped from late September to the day before Christmas, partly because investors were worried that the global economy was slowing dramatically and could fall into a recession. Since Dec. 26, stocks have regained about half of what they lost in that downturn.

On Monday the S&P 500 fell 13.65 points, or 0.5%, to 2,582.61. The Dow Jones industrial average fell 86.11 points, or 0.4%, to 23,909.84.

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The Nasdaq composite retreated 65.56 points, or 0.9%, to 6,905.92. The Russell 2000 index of smaller-company stocks slid 14.57 points, or 1%, to 1,432.81.

The stock market’s recent rally suggests investors aren’t quite as worried about the global economy or the state of trade talks. They still took a cautious approach to technology companies Monday. Apple shares fell 1.5% to $150; they tumbled last month after Apple said its sales in China were falling. Chipmaker Texas Instruments fell 2.3% to $96.33.

Wynn Resorts, which has two of its three casinos in Macau, slumped 4.8% to $108.10.

A leading House Democrat, Rep. Elijah Cummings, announced a sweeping investigation of the pharmaceutical industry’s pricing practices for drugs that are used to treat conditions including cancer, diabetes, kidney failure and nerve pain.

The Trump administration is pursuing its own plan to lower drug prices by approving more generic medications and trying to do away with industry practices that allow manufacturers, insurers and pharmacy benefit managers to profit at consumers’ expense.

AbbVie fell 2.8% to $84.76. Merck fell 2% to $73.37.

Citigroup and other banks stood out. Citi climbed 4% to $58.93 after it said its earnings rose in the last three months of 2018, helped by a lower tax rate and lower expenses.

PG&E, the parent of Pacific Gas & Electric, plunged 52.4% to $8.38 after it said it will file for Chapter 11 bankruptcy protection. It faces potentially colossal liabilities over deadly California wildfires in 2017 and 2018, and on Sunday it announced the resignation of Chief Executive Geisha Williams. The company said deliveries of natural gas and electricity shouldn’t be affected.

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PG&E’s market value has dropped by $20 billion since November, when reports indicated the company had a power outage around the time and place the deadly Camp fire began. That Northern California blaze killed at least 86 people and destroyed more than 18,000 buildings.

Investors now value the company at $4.3 billion. Media reports say PG&E’s liabilities could reach $30 billion.

Gannett, the publisher of USA Today, rocketed 21.2% to $11.82 after Digital First Media said it offered to buy the company for $12 a share, or $1.36 billion. Gannett said it would review the proposal.

Newmont Mining said it will buy Canada’s Goldcorp for $10 billion, creating the world’s biggest gold miner as gold becomes more expensive to procure. Goldcorp rallied 7.1% to $10.38. Newmont fell 8.9% to $31.78.

Lululemon Athletica climbed 5.7% to $139.73 after the athletic gear company raised its fourth-quarter profit and sales forecasts.

Tailored Brands dived 17.8% to $12.07 after the clothing company cut its profit forecasts and said sales at its Jos. A. Bank brand weakened in late December.

British lawmakers are scheduled to vote Tuesday on Prime Minister Theresa May’s deal covering Britain’s planned departure from the European Union, and all indications are that the deal will be rejected. That could contribute to volatility for British markets, particularly the pound. Britain is scheduled to leave the EU on March 29.

The FTSE 100 index fell 0.9%. The pound rose to $1.2865 from $1.2845.

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U.S. bond prices turned lower. The yield on the 10-year Treasury note rose to 2.71% from 2.69%.

Benchmark U.S. crude oil fell 2.1% to $50.51 a barrel in New York. Brent crude, the international standard, slid 2.5% to $58.99 a barrel in London.

Natural gas jumped 15.9% to $3.59 per 1,000 cubic feet. Wholesale gasoline fell 2.6% to $1.36 a gallon. Heating oil fell 1.4% to $1.85 a gallon.

The dollar fell to 108.20 yen from 108.50 yen. The euro stayed at $1.1465.


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