Another volatile day on Wall Street ended Wednesday with the major stock indexes far from their session lows but still beaten down by an array of data that once again raised concerns of a global economic slowdown and left investors jittery.
All three major indexes closed lower. The Dow Jones Industrial Average closed down 186 points, or 1.06%, to 17427. The S&P 500 was down 11 points, or 0.58%, at 2011. The Nasdaq was down 22 points, or 0.48%, at 4639.
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The closing figures were a significant rebound from earlier lows, when the Dow, for instance, had fallen more than 340 points.
A disappointing December retail sales report was perhaps the biggest shock to the market, coming in well below expectations and sending futures sharply lower ahead of the opening bell.
The Commerce Department reported retail sales saw a 0.9% decline in December, the biggest drop since January 2014 and a steeper drop than the 0.1% fall Wall Street expected. Excluding the volatile autos segment, sales fell 1%, its biggest drop since March 2009, while economists expected sales in this segment to hold steady for the month.
Investors also got a mixed read on U.S. import and export prices for December.
The Labor Department reported import prices dropped 2.5% in December, the biggest decline since December 2008, while Wall Street expected a steeper drop of 2.9% for the month. Meanwhile, export prices fell 1.2% in December, the biggest decline since June 2012, steeper than the 1% fall economists forecast.
Less-than-stellar bank earnings Wednesday from J.P. Morgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC), two of the largest U.S. banks, didn’t help matters.
J.P. Morgan said its fourth-quarter profit and revenue fell as the firm faced a one-time $990 million legal costs. Results missed Wall Street expectations, sending shares down 3.7%. Wells Fargo & Co. said fourth-quarter net income rose 1.8% on the back of stronger loan growth. Quarterly revenue beat expectations, yet shares fell 0.67%.
Turning away from riskier stocks, investors sought refuge in safer assets such as U.S. government bonds. The yield on the 10-year Treasury note dropped to 1.792% from 1.890% on Tuesday. On Wednesday, the yield on the 30-year bond hit as low as 2.375%, breaking the 2.439% set in July 2012, which had been the lowest intraday yield for the maturity on record.
Solid recent labor reports, with the economy adding well more than 200,000 new jobs each month as the headline unemployment rate has fallen to its lowest level in six years, combined with rapidly falling energy prices had led economists to predict that consumer spending would pick up significantly in the last quarter of 2014.
“The results were disappointing, and were weak even after accounting for the huge plunge in gasoline prices,” Stuart Hoffman and Gus Faucher, economists at PNC Financial Services said. “The new data indicate that the holiday season was an OK one, but not great,” the economists said.
All of which raises new concerns about the strength of the momentum of the ongoing U.S. recovery. The disappointing retail sales report came a day after the World Bank cut its outlook for global growth in 2015.
Stock markets have been increasingly volatile in recent days as investors respond to mixed data and try to determine where the global economy is headed.
Stocks ended lower on Tuesday after swinging wildly during the session. The Dow fell 0.2% to 17613.68 and the S&P declined 0.3% to 2023.03.
In commodity markets, crude-oil futures fell 1.3% to $45.29 a barrel. Gold futures added 0.5% to $1239.90 an ounce. Copper prices hit a 5 1/2 -year low on Wednesday.