U .S. stocks slumped on Friday as weak data from China and Europe stoked fears of a global economic slowdown, while Johnson & Johnson slid after Reuters reported the company knew for decades that asbestos lurked in its Baby Powder.
The report, which J&J has disputed, sent the company’s shares tumbling 8.31 per cent in heavy volume. The stock was easily the biggest drag on the S&P 500 and the Dow Industrials.
The pharma major also pulled down the S&P healthcare index 2.78 per cent, making it the biggest decliner among the 11 major sectors.
The technology index, which includes a number of companies with global operations, especially China, dropped 1.74 per cent. Apple Inc fell 2.45 per cent, with some reports citing a top analyst slashing iPhone sales estimate for the decline.
Sentiment was weak from the start of trading after China reported weak monthly retail sales growth and industrial output numbers, with disappointing economic data from Euro zone, France and Germany souring the mood.
“The root of this decline is due to the global economic worries plus a plunge in Johnson & Johnson shares,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“We need a true breakthrough in U.S.-China trade talks. Any agreement at this point would alleviate fears of global economies sinking further and that would diminish this high volatility in the market.”
The market has struggled this week with choppy trading and has failed to hold on to opening levels in magnitude or direction on concerns ranging from trade talks, interest rates, a flattening U.S. Treasury yield curve to uncertainty over the shape of Brexit.
The consumer staples and energy sectors fell more than 1.5 per cent, while consumer discretionary and industrials were down over 1 per cent.
The Dow Jones Industrial Average was down 411.99 points, or 1.67 per cent, at 24,185.39. The S&P 500 was down 37.10 points, or 1.40 per cent, at 2,613.44 and the Nasdaq Composite was down 98.08 points, or 1.39 per cent, at 6,972.26.
Costco Wholesale Corp dropped 8.21 per cent after reporting a fall in quarterly gross margin and was the biggest laggard on the consumer staples.
Walgreens Boots Alliance Inc was another healthcare stock that declined, down 3.97 per cent, after Goldman Sachs downgraded the drugstore owner’s shares.
Cisco Systems Inc slipped 3.14 per cent after brokerage Instinet moved to sidelines on the company’s stock.
Investors also shrugged off Beijing’s announcement that it would suspend additional tariffs on U.S.-made vehicles and auto parts for three months from Jan. 1.
A strong U.S. retail sales data also had little impact on markets, with the S&P retail sector falling 1.29 per cent.
The energy sector pushed Canada’s main index lower on Friday, as oil prices declined after China reported slower economic growth, pointing to lower fuel demand from the world’s biggest oil importer.
At 1:32 p.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 150.30 points, or 1.02 per cent, at 14,600.05
Nine of the index's 11 major sectors were trading lower, with the technology sector’s 4.6-per-cent fall leading the losses.
Shopify Inc. fell 12.3 per cent, the most on the TSX, after the e-commerce company raised $400 million in equity.
Energy stocks dropped 3 per cent. Encana Corp. lost 5.4 per cent, while Crescent Point Energy Corp. sat down 6.4 per cent. Suncor Energy Inc. and Canadian Natural Resources Ltd. were down 3.3 per cent and 2.8 per cent, respectively.
Oil prices dropped about 2 per cent on Friday, weighed down by a falling U.S. stock market, while weak economic data from China pointed to lower fuel demand in the world’s biggest oil importer.
Brent crude futures for February delivery fell $1.16 to $60.29 a barrel, a 1.9-per-cent loss. U.S. West Texas Intermediate (WTI) crude futures fell $1.24 to $51.34 a barrel, a 2.4-per-cent loss.
Global benchmark Brent was set for a weekly loss of about 2.2 per cent, while WTI was on track to decline 2.4 per cent.
“The oil complex remains vulnerable to heavy selling into the equities especially when combined with a strengthening in the U.S. dollar as is the case so far today,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.