Global growth worries, J&J’s tumble drag Wall St. lower

(Reuters) – U.S. stocks slumped on Friday as weak data from China and Europe stoked fears of a global economic slowdown, while Johnson & Johnson slid after Reuters reported the company knew for decades that asbestos lurked in its Baby Powder.

The report, which J&J (JNJ.N) has disputed, sent the company’s shares tumbling 8.31 percent in heavy volume. The stock was easily the biggest drag on the S&P 500 and the Dow Industrials.

The pharma major also pulled down the S&P healthcare index .SPXHC 2.78 percent, making it the biggest decliner among the 11 major sectors.

The technology index .SPLRCT, which includes a number of companies with global operations, especially China, dropped 1.74 percent. Apple Inc (AAPL.O) fell 2.45 percent, with some reports citing a top analyst slashing iPhone sales estimate for the decline.

Sentiment was weak from the start of trading after China reported weak monthly retail sales growth and industrial output numbers, with disappointing economic data from Euro zone, France and Germany souring the mood.

“The root of this decline is due to the global economic worries plus a plunge in Johnson & Johnson shares,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“We need a true breakthrough in U.S.-China trade talks. Any agreement at this point would alleviate fears of global economies sinking further and that would diminish this high volatility in the market.”

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., December 11, 2018. REUTERS/Brendan McDermid

The market has struggled this week with choppy trading and has failed to hold on to opening levels in magnitude or direction on concerns ranging from trade talks, interest rates, a flattening U.S. Treasury yield curve to uncertainty over the shape of Brexit.

The consumer staples .SPLRCS and energy .SPNY sectors fell more than 1.5 percent, while consumer discretionary .SPRCD and industrials .SPLRCI were down over 1 percent.

At 12:53 p.m. ET, the Dow Jones Industrial Average .DJI was down 411.99 points, or 1.67 percent, at 24,185.39. The S&P 500 .SPX was down 37.10 points, or 1.40 percent, at 2,613.44 and the Nasdaq Composite .IXIC was down 98.08 points, or 1.39 percent, at 6,972.26.

Costco Wholesale Corp (COST.O) dropped 8.21 percent after reporting a fall in quarterly gross margin and was the biggest laggard on the consumer staples.

Walgreens Boots Alliance Inc (WBA.O) was another healthcare stock that declined, down 3.97 percent, after Goldman Sachs downgraded the drugstore owner’s shares.

Cisco Systems Inc (CSCO.O) slipped 3.14 percent after brokerage Instinet moved to sidelines on the company’s stock.

Investors also shrugged off Beijing’s announcement that it would suspend additional tariffs on U.S.-made vehicles and auto parts for three months from Jan. 1.

A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., December 14, 2018. REUTERS/Brendan McDermid

A strong U.S. retail sales data also had little impact on markets, with the S&P retail sector .SPXRT falling 1.29 percent.

Declining issues outnumbered advancers for a 2.80-to-1 ratio on the NYSE and for a 2.14-to-1 ratio on the Nasdaq.

The S&P index recorded eight new 52-week highs and 75 new lows, while the Nasdaq recorded five new highs and 319 new lows.

Reporting by Medha Singh in Bengaluru; Editing by Sriraj Kalluvila

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