US stocks ended sharply lower, with major indexes falling 1 percent in heavy trading, as weak data out of Germany raised concerns about the strength of global growth ahead of the start of earnings season.
The International Monetary Fund cut its global economic growth forecasts for the third time this year, suggesting the environment remains difficult for companies, especially ones with multinational exposure.
The day’s losses were broad, with all ten primary S&P 500 sectors ending lower, although cyclical shares – tied to the pace of economic growth – led the decline. Industrial shares lost 2.4 percent, while financials shed 1.8 percent and material companies sank 1.8 percent.
With the day’s decline, the S&P 500 fell back below its 100-day moving average, a sign of weakening near-term momentum. The CBOE Volatility index rose 11 percent to 17.2, near a level that has recently been taken as an indication the market is oversold.
The Dow Jones industrial average fell 272.52 points, or 1.6 percent, to 16,719.39, the S&P 500 lost 29.72 points, or 1.51 percent, to 1,935.1, ending at its lowest level since Aug. 12. The Nasdaq Composite dropped 69.60 points, or 1.56 percent, to 4,385.20.
Coca-Cola Co was the only one of the 30 Dow components to end higher on the day, up 0.7 percent to $43.92. The beverage giant moved within a dollar of its all-time intraday high of $44.44, hit on July 15, 1998.
Shares of Yum Brands Inc fell 0.5 percent to $69.35 in extended trading after the fast food chain operator cut its full-year outlook, citing weakness in Chinese sales.
Declining issues outnumbered advancers on the NYSE by 2,379 to 671, for a 3.55-to-1 ratio on the downside; on the Nasdaq, 2,188 issues fell and 516 advanced for a 4.24-to-1 ratio favoring decliners.
The benchmark S&P 500 index posted 8 new 52-week highs and 15 new lows; the Nasdaq Composite recorded 15 new highs and 188 new lows.
About 6.43 billion shares traded on all US platforms, according to BATS exchange data, below the average of 7.27 billion over the past five sessions.
EUROPEAN MARKETS
A key European equity index dropped to a 1 1/2-month low as the International Monetary Fund cut its growth estimates for the euro zone’s three largest economies and German industrial output data disappointed.
Market bets on a European economic recovery faded as the IMF downgraded its forecasts for Germany, France and Italy. Meanwhile, Germany reported its biggest drop in industrial production since the financial crisis in early 2009.
The FTSEurofirst 300 index of top European shares ended 1.5 percent lower at 1,329.76 points, its lowest level since August 18. All sectoral constituents of the STOXX Europe 600 index closed lower.
The FTSEurofirst has fallen 5.8 percent since hitting a 6 1/2-year high in September, rattled by some poor euro zone data, disappointment at the European Central Bank’s recent stimulus action and the prospect of a tightening in US monetary policy.
The worsening economic picture left bullish investors pinning their hopes on the ECB, which cut its interest rate to a record low and announced plans to buy asset-back securities – bundles of debt – and covered bonds last month.
Miner Rio Tinto surged 2.2 percent after rejecting a merger approach by Glencore, although Rio’s shares came off their intra-day high after Glencore said it was no longer considering a bid for the rival.
Glencore’s stock fell 2.4 percent.
News of the approach rekindled speculation about consolidation in the mining industry, helping shares in Anglo American rise 2 percent.
The STOXX basic resources sector index, down 0.5 percent on Tuesday, has lost 12 percent since late July, hurt by a slump in metal prices such as iron ore.
ASIAN MARKETS
Meanwhile, Japanese stocks slipped today as the yen rebounded from lows and real estate and financial shares gave up gains after the Bank of Japan stood pat on policy, even though that stance was largely expected.
The Nikkei share average fell 0.7 percent to 15,783.83. The yen extended gains after a sharp rebound the previous day to trade at 108.62 yen to the dollar, compared to a six-year low of 110.09 hit last week.
Real estate companies and banks, seen as a main beneficiary of any easing in the BOJ’s policy, turned negative after the central bank refrained from additional easing. Toshiba tumbled 4.3 percent after US chipmaker shares fell as rival Samsung Electronics unveiled plans to spend $14.7 billion on a new chip facility.
The broader Topix fell 0.4 percent to 1,290.89, and the JPX-Nikkei Index 400 shed 0.4 percent to 11,734.20.
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