FOX Business: The Power to Prosper
Heightened anxiety that slowdowns in several key global marketplaces may begin to take a toll on America's economic recovery shook traders' confidence, sending stocks sinking into the red.
Continue Reading Below
The Dow Jones Industrial Average fell 78.5 points, or 0.6%, to 13046, the S&P 500 slumped 10.1 points, or 0.72%, to 1393 and the Nasdaq Composite fell 12 points, or 0.39%, to 3063.
Companies involved in heavy industries were slumping the most on fears that a slowdown in global markets could weigh on demand.
Caterpillar (NYSE:CAT), Alcoa (NYSE:AA), Boeing (NYSE:BA) and Chevron (NYSE:CVX) performed the worst out of the Dow components, all sliding more than 1.8%. The four companies combined cost the Dow some 50 points.
Consumer staples were holding up the best. Indeed, Procter & Gamble (NYSE:PG) and Coca-Cola (NYSE:KO) were among the best performing blue chips on the day.
Volatility jumped 4.2% as tracked by the CBOE's VIX, while Treasury prices advanced as traders sought refuge from riskier equities. . The yield on the 10-year note fell 0.045-percentage point to 2.253%.
Commodities were under pressure from demand concerns and a stronger U.S. dollar as well. The benchmark crude oil contract traded in New York slumped $1.92, or 1.8%, to $105.35 a barrel. Wholesale New York Harbor gasoline dipped 0.52% to $3.34 a gallon.
Global Growth Concerns Spook Traders
Chinese factory activity contracted for the fifth-straight month in March, according to a survey by HSBC and Markit that comes out ahead of the official government data. The news comes on the heels of other signs that the once powerful growth engine in the world's No. 2 economy may be slowing down.
"With new export orders sluggish and domestic demand still softening, China's slow down has yet to finish," Qu Hongbin, chief China economist at HSBC said in a statement. "This calls for further easing to come from Beijing."
Manufacturing data from Europe were also of concern, market participants said. Output in the eurozone contracted in March, hitting a three-month low, according to a report by Markit. Germany, which is seen as the 17-member bloc's economic powerhouse, saw continued growth, but at the slowest pace in three months. Meanwhile, France, the bloc's second-biggest economy, saw production shrink for the first time in four months.
"The Eurozone economy contracted at a faster rate in March, suggesting that the region has fallen back into recession," Chris Williamson, Chief Economist at Markit said in a statement. "Germany and France look to have avoided a return to recession, but only by very narrow margins."
European stocks slumped nearly 1.5%, while the euro dipped 0.45% to $1.3157.
U.S. Economy Shows More Signs of Improvement
New claims for unemployment benefits fell to 348,000 last week – the lowest level since February 2008 -- from an upwardly revised 353,000, the Labor Department reported. Economists had expected claims to rise to 354,000 from an initially reported 351,000. Meanwhile, continuing claims fell to 3.352 million from 3.361 million, the lowest since August 2008.
While the labor market has been slow to recover, the rate of job growth has accelerated dramatically recently, and claims have stayed beneath the closely-watched 400,000 level for weeks.
On the corporate front, FedEx (NYSE:FDX) posted a fiscal third-quarter profit of $1.55 a share, excluding items, on sales of $10.56 billion. Analysts expected the global shipping company to earn $1.35 a share on $10.6 billion.
McDonald's (NYSE:MCD) said its Chief Executive Officer, Jim Skinner, will retire in late June and be replaced by the firm's Chief Operating Officer Don Thompson.
In metals, gold slid $7.80, or 0.47%, to $1,643 a troy ounce.
European blue chips dropped 1.5%, the English FTSE 100 dipped 0.79% to 5846 and the German DAX sold off by 1.3% to 6981.
In Asia, the Japanese Nikkei 225 advanced by 0.4% to 10127 and the Chinese Hang Seng edged higher by 0.22% to 22902.