Fears of a China-led global economic slowdown drove Wall Street to its steepest one-day drop in nearly four years on Friday and left the Dow industrials more than 10% below a May record.
Wall Street’s selloff this week suggested investors are growing nervous about paying high prices for stocks at a time of minimal earnings growth, tumbling energy prices and an expected rate hike by the US Federal Reserve that could gradually usher the end of almost a decade of easy money.
Weak Chinese manufacturing data on Friday, and another drop in China’s stock market, rattled investors’ nerves and led to Friday’s tumble.
You’re definitely witnessing a perfect storm in terms of China timing, people on vacation that affects liquidity, and you’ve got a lot of questions on the Fed and people are obviously focused on oil. If you’re buying a stock, you’re dipping a toe in here.
–Andrew Frankel, Stuart Frankel
The Dow Jones closed down 530.94 points, or 3.12%, to 16,459.75, the S&P 500 lost 64.84 points, or 3.19%, to 1,970.89 and the Nasdaq Composite 171.45 points, or 3.52%, to 4,706.04.
The S&P slumped 5.8% for the week, its biggest weekly decline since September 2011. The index lost more than $1 trillion of its value this week, according to S&P Dow Jones Indexes. Only 10 S&P 500 components advanced on Friday.
(With inputs from Reuters)
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