U.S. stocks forfeited their gains from the week Friday, dropping after worrisome data came in overnight from China.
The Dow Jones industrial average slid 496 points, or 2 percent, to finish the session at 24,100. The Standard & Poor’s 500-stock index was down 1.9 percent, and the Nasdaq was 2.3 percent off.
All 11 U.S. S&P sectors were down Friday, with health and technology leading the way. All 30 Dow stocks took losses, with health giant Johnson & Johnson suffering a 9 percent decline on a Reuters report that said the company knew for decades that there sometimes were small amounts of asbestos in its baby powder.
The Dow, down 550 points at its Friday low, and the S&P were on pace for their worst quarter since 2011. The S&P 500 was back in correction territory on the retreat and saw its sixth decline in eight sessions.
The tech-heavy composite Nasdaq is straddling break even for the week, but it is up slightly on the year. It is on track for its worst quarter since 2008.
The retreat came on steep losses in Asia, where the Japanese Nikkei 225 dropped 2 percent, the Hang Seng in Hong Kong dropped 1.6 percent, and the Shanghai Composite was down 1.5 percent.
U.S. investors were reacting to news that the Chinese economy may be weakening. China’s retail sales are growing at the slowest pace in 15 years, according to November data. Industrial production is down as well.
“We are getting a validation of the forecasts for lower Chinese economic growth,” said Sam Stovall, chief investment strategist at CFRA.
“China contributes to the earnings growth in U.S. companies,” Stovall said. “If the second-largest economy in the world begins to stumble, it will have a ripple effect around the globe.”
Stovall said the Chinese economy is expected to grow 6.6 percent this year, while slowing to 6 percent in 2019. “Many are now wondering if that 6 percent forecast is too optimistic,” he said.
Markets lurched around all week, with the Dow bouncing hundreds of points a day as nervous investors unpacked every piece of news, looking for trading clues.
Sentiment swayed by the minute as news poured out about Brexit, China, oil prices, tweets and a wild Oval Office screaming match between President Trump and Democratic leaders Rep. Nancy Pelosi (Calif.) and Sen. Charles E. Schumer (N.Y.).
“It was a volatile, nerve-racking week,” said Kenny Polcari of ButcherJoseph Asset Management. “Just when you think the market is settled, you get hit out of left field. It continues to revolve around the trade uncertainty. One day we are on, one day we are off. One day China is good. One day China is bad.”
“Throw in the uncertainty over next Wednesday, when the Fed is expected to announce a quarter point increease in interest rates,” Polcari said. “The concern is what they say about what’s going to happen in 2019.”
The slowing Chinese economy comes as the United States and China are negotiating their economic differences over tariffs and intellectual property.. China reportedly has agreed to substantial changes for U.S. companies that seek to do business there.
The United States and China have set a 90-day deadline to reach agreement.
“Investors remain nervous about short-term events, including a small potential for a government shutdown as made clear in the Trump-Pelosi-Schumer meeting, as the relatively calm past few days returns to volatility,” said Howard Silverblatt of S&P Dow Jones Indices.
The Chinese pullback was seeping into oil markets.
U.S. benchmark crude — West Texas Intermediate — was down nearly $1, about 2 percent, and straddling just above $51 a barrel. A $50 per barrel price is a key threshold. Many oil producers find it increasingly difficult to be profitable at prices below $50.
Brent crude was trading about $60 per barrel, down more than 1 percent.
U.S.-based oil giants were under pressure, with Exxon Mobil down 1.7 percent at about $1.32 a share and Chevron down $1.5 percent at about $173 per share.
“Oil prices are under selling due to weak economic data out of China last night,” said John Kilduff of Again Capital. “China’s economic outlook is key to oil market supply dynamics. A strong dollar is also weighing on oil prices, as the two are inversely correlated.”
Oil prices have dropped around 30 percent in the past three months on global oversupply. The United States, Russia and Saudi Arabia are pumping like mad, flooding the world’s oil markets and depressing prices.
To rectify the surplus, the Organization of the Petroleum Experting Countries, led by Saudi Arabia, and non-OPEC allies led by Russia last week agreed to cut production by 1.2 million barrels per day.