ON 01/15/16 AT 9:42 AM
BY ANGELO YOUNG
This story was updated at 11:00 a.m. EST.
U.S. stocks opened sharply lower Friday in a rocky final trading session of the week as both Chinese stocks and oil prices plunged, heightening concerns that a global recession is underway that could spill into the U.S. economy. U.S. retail sales fell unexpectedly in December, and the producer price index, a measure of price fluctuations from providers of goods and services, ticked downward — both hinting that the U.S. economy was weaker in the fourth quarter.
“The markets across the globe are clearly reflecting recession — except for stocks, the last bullish domino, and they’re falling,” Adam Sarhan, founder and chief executive of Sarhan Capital, said.
The Dow Jones Industrial Average (INDEXDJX:.DJI) was down 322 points, or 2 percent, in morning trading Friday, while the broader Standard & Poor’s 500 index (INDEXSP:.INX) lost 36 points, or 1.9 percent. The Nasdaq composite (INDEXNASDAQ:.IXIC) fell 114 points, or 2.5 percent.
Both the Dow and the S&P 500 are down nearly 8 percent for the year.
“Most Asian and European equity market indices are having a rough final trading session today, capping off a volatile week,” Stephen Guilfoyle, managing director of floor operations at the New York Stock Exchange, said in an email. “The real carnage is in the oil market.” Oil prices per barrel fell into the $20s Friday as Iran talked up oil export plans.
All 10 S&P 500 sectors were down late morning on Friday, with the biggest drops in energy and information technology stocks. All 30 Dow components were in the red, with the biggest declines from Intel Corporation (NASDAQ:INTC), which reported weak gross profit margin expectations, and Chevron Corporation (NYSE:CVX), which led declines in energy companies on Friday morning.
The yield on the benchmark U.S. 10-year Treasury briefly dipped below 2 percent Friday as traders fled to safe-harbor investment before bouncing back to 2.04 percent. The bond yield falls when traders are concerned about stocks. Gold, another safe-harbor investment, gained 1.85 percent to $1,093.50 per ounce.
Investors have been jittery in recent weeks as global markets have gotten off to their worst-ever start to a year, spooked by fears of a slowdown in China and as economists slashed fourth-quarter U.S. growth estimates.
In other news Friday, General Electric Co. (NYSE:GE) said it plans to sell its appliance business to China’s Haier Group for $5.4 billion in cash — another step in its push to sell its noncore assets and project itself as a technology company, Reuters said. General Electric stock was down 1.69 percent Friday morning, outperforming the S&P. Haier Electronics Group Co., Ltd. (HKG:1169) shares gained more than 1 percent in Hong Kong.
Major Asian markets closed down Friday, with the CSI 300 Index dropping 3.2 percent. China’s mainland Shanghai Composite Index lost 107 points, or 3.5 percent, while the Shenzhen Composite plunged 63 points, or 3.4 percent. Hong Kong’s Hang Seng dropped 297 points, or 1.5 percent, while Japan’s Nikkei 225 shed 94 points, or 0.5 percent.
European indexes closed in the red Friday, with the broader Stoxx Europe 600 shedding 2.6 percent. The German DAX closed down 260 points, or 2.7 percent, while the Paris CAC lost 99 points, or 2.3 percent. London’s FTSE shed 113 points, or 2 percent.
Both major global benchmark oil prices dropped below $30 a barrel Friday before Brent crude edged back up slightly.
U.S. West Texas Intermediate crude oil shed 5 percent to $29.64 per barrel for February delivery on the New York Mercantile Exchange. Brent crude, the global benchmark for oil prices, fell 3.9 percent to $29.68 for March delivery on the London ICE Futures Exchange. Prices for both benchmarks have dropped more than 9 percent since the start of the year.
Goldman Sachs Group Inc. (NYSE:GS) shares dropped nearly 3 percent after the investment bank said Thursdayit was taking a $1.5 billion charge in its fourth-quarter earnings to settle with regulators related to how it underwrote mortgage-backed securities from 2005 to 2007, before the housing market meltdown.