UPDATE: Jan. 8, 2016, 5:25 PM ET
NEW YORK (AP) — A wave of late selling pummeled U.S. stocks Friday and pushed the market to its worst week in four years.
The dismal start to the new year comes as investors worry that China’s huge economy is slowing down. That has helped send the price of oil plunging to its lowest level since 2004, the latest blow to U.S. energy companies.
Industrial and technology companies such as Boeing and Apple that do a lot of business in China have also fallen sharply this week. Mining companies such as Freeport-McMoRan plunged as copper prices have fallen. China is a major importer of copper.
Stocks started the day higher, driven in part by news of an encouraging burst in hiring last month by U.S. employers. China’s stock market also rose 2 percent overnight, recovering somewhat after steep drops earlier in the week triggered trading halts.
Indexes wavered between small gains and losses for most of the day, but took a decisive turn lower in the last hour of trading. That made this the worst week since September 2011, when the market was roiled by the fight over the U.S. debt ceiling and Standard & Poor’s move to cut the credit rating of the U.S. government.
The Dow Jones industrial average dropped 167.65 points, or 1 percent, to 16,346.45. The Standard & Poor’s 500 index fell 21.06 points, or 1.1 percent, to 1,922.03. The Nasdaq composite index shed 45.80 points, or 1 percent, to 4,643.63.
The Dow and S&P 500 are each down about 6 percent for the week. The Nasdaq composite fell even more, 7.3 percent. That index is heavily weighted with technology and biotech companies, both of which were high-fliers last year.
The largest losses on Friday went to financial stocks. JPMorgan Chase lost $1.35, or 2.2 percent, to $58.92 and Citigroup fell $1.43, or 3 percent, to $46.13. Health care stocks slumped, led by drug companies. Energy stocksalso skidded as the price of oil, already at decade lows, continued to fall.
European stocks also rose early in the day, but couldn’t hang on. The FTSE 100 index of leading British shares declined 0.7 percent while Germany’s DAX lost 1.3 percent. The CAC-40 in France slid 1.6 percent.
The same pattern held in the U.S. In its monthly jobs report, released before the stock market opened, the Labor Department said U.S. employers added 292,000 jobs in December, far more than economists had forecast.
That’s the latest sign the U.S. economy is still growing. On average employers added 284,000 jobs per month in the fourth quarter, the best rate in a year.
Michael Fredericks, portfolio manager for BlackRock Multi-Asset Income Fund, said the labor market is healthy and wages could improve this month. “These are unusually strong job creation numbers,” he said.
Fredericks said the low wage growth and limited inflation will make the Federal Reserve proceed cautiously as it raises interest rates. In December the Fed raised rates for the first time in nine years, but interest rates are still very low.
Throughout the week, worries about China’s economy and shocks to its markets have canceled out positive news from the U.S. and Europe. While China’s economy is still growing, that growth isn’t as fast as it has been. That could hurt sales of everything from iPhones to oil and heavy machinery.
Oil prices also lost ground. U.S. crude fell 11 cents to close at $33.16 a barrel in New York and Brent crude, a benchmark for international oils, declined 20 cents to $33.55 a barrel in London.
Exxon Mobil lost $1.54, or 2 percent, to $74.69 and Tesoro fell $5.41, or 5 percent, to $101.62.
This week retailers started disclosing their holiday-season results. Gap and American Eagle both reported disappointing sales. Gap stock dropped $3.83, or 14.3 percent, to $22.91, its lowest in almost four years. American Eagle tumbled $2.64, or 16.6 percent, to $13.24.
Department stores were among the biggest losers on the S&P 500. Their holiday sales have been hurt by the unusually warm winter weather. Kohl’s fell $2.98, or 5.9 percent, to $47.88 and Macy’s lost $1, or 2.7 percent, to $35.89.
The Container Store reported a surprise third-quarter loss and disappointing sales, and its stock plunged $2.96, or 41.2 percent, to $4.22. The company went public in November 2013 with an IPO that priced at $18 per share and it finished its first trading day at $36.20.
The price of gold fell $9.90, or 0.9 percent, to $1,097.90 an ounce. Silver declined 42.6 cents, or 3 percent, to $13.918 an ounce. Copper was unchanged at $2.022 a pound.
The euro fell to $1.0903 from $1.0927 and the dollar edged up to 117.67 yen from 117.50 yen late Thursday. Bond prices rose. The yield on the 10-year Treasury note edged down to 2.12 percent from 2.15 percent.
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Marley Jay can be reached at http://twitter.com/MarleyJayAP. His work can be found at http://bigstory.ap.org/journalist/marley-jay.
Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
China’s economy is tanking and it’s bringing down the Dow? Thanks Obama!
You’d think the Chinese economy would continue to proper just from rebuilding the crap that’s collapsed, blown up, or become hazardous through shoddy construction or poor regulations.
Drudge had his usual thoroughly misleading headline on this yesterday, drafting off a link to a speech George Soros gave specific to the Chinese bubble bursting in which he compared that to his take on the US housing bubble burst - which really means this is relatively early in a Chinese markets deleveraging process that’s going to take at least a number of months and more likely in the years to go thru. I have no idea if Soros would agree with me on this, but I’d put what’s been happening in China recently as, within the analogy Soros suggested, and somewhere around the spring of 2007 when the first shocks were hitting some of the Wall Street bankster houses that had yet to start off-loading their piles of steaming shit CDs onto AIG thru variations on the various contra bets that some hedge funds had been bringing into them since the first summer after GWB got re-“elected”. If that’s about right, that means there are still a number ‘shock’ steps to come, including possibly -tho not nearly as inevitably as with the collapse here- a ‘Big One’.
It’ll certainly have much bigger shocks on the Asia side of the Pacific Rim, but the one thing China has going for it is political controls. We’ve been led to believe that for a time from November 2008 when Obama knew he was elected into early spring 2009, the Obama transitional group and the incoming Obama WH economic team considered, how seriously I don’t think we can know, ‘nationalizing’ the U.S. bank system (which I don’t think was at all do-able give the near total quasi-religious denialism going on among GOP Congress critters, plus the fact that GWB had let Paulson drop hundreds of billions in essentially unstructured credit on the biggest bankster houses in addition to the Bush Bailout, IOW not just the political unity was lacking but the banksters could have just bought the frickin’ country at that point). Those factors just aren’t present in the same ways in China: the oligarchs already own the whole show and have more than enough control over the media and armed forces, to re-asset the imposition of controls by just calling them ‘nationalization’.
The REAL threat I foresee with the China bubble bursting is yet another ‘flight of capital’ from the so-called ‘emerging’ markets into U.S. assets, sparking a series of commodity bubbles here.
Good thing we’ve broken up all the too-big-to-fail banks and financial institutions so that we won’t be called upon to bail them out again in the near-certain event of another financial meltdown at some point.
Oh, wait – we didn’t?
Shit.
Pressed by Bernie Sanders about the risk of “too big to fail” financial institutions, here’s what Alan Greenspan had to say back in February 2000 (5:20 in the video):
“Our notion would NOT be the question of perceiving that an institution is too big to fail, and that therefore gets governement support.”
Nah, that would NEVER happen.
https://www.youtube.com/watch?v=ftyWP75SjVA