NEW YORK | Stocks staggered to eight-month lows Friday after weak economic reports from China and Europe set off more worries about the global economy. Rising tensions in Europe over Britain’s impeding exit from the European Union also darkened traders’ moods.
The Dow Jones Industrial Average dropped as much as 563 points. On the benchmark S&P 500 index, health care and technology companies took the worst losses. Johnson & Johnson plunged by the most in 16 years after Reuters reported that the company has known since the 1970s that its talc Baby Powder sometimes contained carcinogenic asbestos. The company denied the report.
China said industrial output and retail sales both dipped in November. That could be another sign that China’s trade dispute with the U.S. and tighter lending conditions are chilling its economy, which is the second-largest in the world. Meanwhile, purchasing managers in Europe noted that economic growth was slipping.
Sameer Samana, senior global market strategist for Wells Fargo Investment Institute, said investors are worried that weakness will make it way to the U.S. They’re wondering if the U.S. economy is likely to run out of steam sooner than they had thought.
“Market consensus has been that the next recession is probably in 2020 or beyond,” he said. Now, he said, the market is “really testing that assumption and trying to figure out whether it’s sooner.”
The S&P 500 index lost 50.59 points, or 1.9 percent, to 2,599.95, its lowest close since April 2. The Dow retreated 496.87 points, or 2 percent, to 24,100.51.
The Nasdaq composite slid 159.67 points, or 2.3 percent, to 6,910.66. The Russell 2000 index of smaller-company stocks fell 21.89 points, or 1.5 percent, to 1,410.81.
December is typically the best month of the year for stocks and Wall Street usually looks forward to a “Santa Claus rally” that adds to the year’s gains. With 10 trading days left this month, however, the S&P 500 is down 5.8 percent. That followed a small gain in November and a steep 6.9 percent drop in October.
Johnson & Johnson dropped 10 percent to $133 in very heavy trading. Its market value fell by $40 billion.
Reuters reported that court documents and test results show Johnson & Johnson has known for decades that its raw talc and finished Baby Powder sometimes contained asbestos, but that the company didn’t inform regulators or the public. The company called the story “false and inflammatory.”