US stocks fell Friday morning as signs piled up that the global economy is hitting the brakes, headlined by a surprisingly weak report on the US job market.
The S&P 500 was on track for its fifth straight decline, which would be its longest losing streak in nearly four months. It followed the lead of other markets around the world after Chinese stocks plunged amid worries about slowing growth in the world’s second-largest economy. Just a day earlier, investors’ concerns were focused on Europe after the central bank there slashed its forecast for economic growth this year.
The market’s momentum has stalled this week after enjoying a sharp bounce back at the start of this year. This week’s losses for the S&P 500 are the worst since December, but not as severe as they were then, when worries were peaking about a slowing global economy and that interest rates may rise too quickly. Since then, the Federal Reserve helped calm some of the worries by pledging to be patient in raising interest rates.
Analysts are debating whether these latest moves are the last gasps for the longest bull market on record for US stocks, which began 10 years ago this weekend, or just the latest hurdle for it muddle through.
KEEPING SCORE: The S&P 500 fell or 0.8 per cent as of 10:17am. Eastern time. The Dow Jones Industrial Average lost 171, or 0.7 per cent, to 25,301, and the Nasdaq composite fell 1 per cent. The S&P 500 was on pace for just its second losing week since late December.
JOB WOES: The strong US labour market has been a major pillar of support for the stock market’s run in recent years, but Friday’s jobs report was surprisingly bad.
Employers added just 20,000 jobs last month, when economists were expecting more than 180,000. Last month’s job growth is also a sharp slowdown from January’s 311,000, a number that the government revised higher on Friday.
Some economists said the surprisingly weak number may have been merely a reversal from the exaggerated strength in earlier months, perhaps exacerbated by bad weather hitting the construction and other industries, and they disagreed on how worried to be about the number.
The report also showed that average hourly pay for workers rose 3.4 per cent last month from a year earlier. It was the strongest wage growth in a decade.
GLOBAL PAIN: Stocks in Shanghai plunged 4.4 per cent after a report showed that Chinese exports plunged 20 per cent last month, far more than economists expected. It’s just the latest wild move for a market that is notoriously volatile. The Shanghai index is still more than 19 per cent higher for the year, even with Friday’s plunge.
The dour report on China’s economy, though, feeds into growing worries about the health of the overall global economy. The Organisation for Economic Co-operation and Development, for example, said it expects global growth this year to be 3.3 per cent, down from the 3.5 per cent that it had forecast just four months ago. The OECD said economic prospects are worker in nearly all the countries that make up the G20, and it cited a slowdown in trade and global manufacturing among other reasons.
The United States and China have been locked in a particularly tense trade dispute, though the countries say they’re making progress in negotiations.
BUYING IN BULK: Costco Wholesale bucked the trend and rose 4 per cent for the biggest gain among stocks in the S&P 500. it reported stronger profit for the latest quarter than analysts expected.
HOME SWEET HOME: Homebuilder stocks were also relatively strong after a report showed that builders broke ground on more new homes in January than economists expected.
Lennar rose 1.5 per cent and D.R. Horton and PulteGroup both gained 0.8 per cent.