Dow slides more than 250 points as fears of global slowdown persist, Nike falls

Stocks dropped on Friday as jitters over the global economy were sparked by dreadful manufacturing data out of Europe and the Federal Reserve’s cautious outlook on the U.S. economy.

The Dow Jones Industrial Average traded 274 points as Nike shares underperformed. The S&P 500 fell 0.9 percent, led by declines in the energy and financials sectors. The Nasdaq Composite declined 1.1 percent.

“There’s a host of worries out there and those worries continue to mount,” said Peter Cardillo, chief market economist at Spartan Capital Securities. “The fear of recession is increasing.”

“As a result, we have a market that is rethinking some of the optimism that was priced in.”

Nike shares also pressured stocks. The athletic apparel company’s stock fell 4.7 percent on the back of weak quarterly sales growth in North America.

IHS Markit said Friday that manufacturing activity in Germany dropped to its lowest level in more than six years in March. In France, manufacturing and services slowed down to their lowest levels in three months and two months, respectively. For the euro zone as a whole, manufacturing fell to its lowest level since April 2013.

US futures point to lower open despite Thursday’s rally
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Stocks dropped on Friday as jitters over the global economy were sparked by dreadful manufacturing data out of Europe and the Federal Reserve’s cautious outlook on the U.S. economy.

The Dow Jones Industrial Average traded 274 points as Nike shares underperformed. The S&P 500 fell 0.9 percent, led by declines in the energy and financials sectors. The Nasdaq Composite declined 1.1 percent.

“There’s a host of worries out there and those worries continue to mount,” said Peter Cardillo, chief market economist at Spartan Capital Securities. “The fear of recession is increasing.”

“As a result, we have a market that is rethinking some of the optimism that was priced in.”

Nike shares also pressured stocks. The athletic apparel company’s stock fell 4.7 percent on the back of weak quarterly sales growth in North America.

IHS Markit said Friday that manufacturing activity in Germany dropped to its lowest level in more than six years in March. In France, manufacturing and services slowed down to their lowest levels in three months and two months, respectively. For the euro zone as a whole, manufacturing fell to its lowest level since April 2013.

These data sent the German 10-year bund yield to their lowest level since 2016, briefly dipping into negative territory.

In the U.S., the spread between the 3-month Treasury bill yield and the 10-year note rate turned negative for the first time since 2007 — thus inverting the so-called yield curve — according to Refinitiv Tradeweb data. An inverted yield curve happens when short- term rates surpass their longer-term counterparts. This is considered a trustworthy indicator of a recession coming in the near future.

These moves come after U.S. central bank surprised investors by adopting a sharp dovish stance on Wednesday, projecting no further interest rate hikes this year and ending its balance sheet roll-offs.

Market sentiment was boosted by the Fed’s updated outlook on interest rates, but the reasons behind it caused some concern.

Stocks were on track to post solid gains for the week through Thursday’s close as sharp increases in the tech and consumer discretionary sectors curbed lingering worries over U.S.-China trade talks.

A U.S. trade delegation, headed by Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, will visit China for a two-day meeting at the end of next week. Chinese Vice Premier Liu He is then expected to travel to Washington in early April.

President Donald Trump said in an interview that aired Friday that talks were going well. However, he also said tariffs on Chinese goods would only come off once China complied with the agreed upon trade deal.

The long-running trade dispute between the world’s two largest economies has battered financial markets in recent months, souring business and consumer sentiment.

CNBC

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Ed Moya

Ed Moya

Senior Market Analyst at OANDA
With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg. He is often quoted in leading print and online publications such as the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University. Follow Ed on Twitter @edjmoya ‏
Ed Moya