US stocks end sharply lower; S&P 500 -2.6%
NEW YORK—US stocks fell sharply Monday, joining European equities in retreat after poor Chinese industrial data deepened worries about the world’s second-biggest economy.
The Dow Jones Industrial Average fell 312.78 points (1.92 percent) to 16,001.89.
The broad-based S&P 500 lost 49.57 (2.57 percent) at 1,881.77, while the tech-rich Nasdaq Composite Index tumbled 142.53 (3.04 percent) to 4,543.97.
The losses put the S&P 500 back in correction territory, defined as a loss of 10 percent or more from its most recent high, in August.
Government data showed China’s crucial industrial companies saw profits fall 8.8 percent in August from a year ago—hit by last month’s shock yuan devaluation, weak demand and plunging share prices.
The weak Chinese data hammered prices of key commodities such as oil and copper, as well as shares of petroleum-linked companies ConocoPhillips (-2.8 percent) and Schlumberger (-4.8 percent) and metals producer Freeport-McMoRan (-9.1 percent).
Art Hogan, chief market strategist at Wunderlich Securities, said investors are brooding over two key questions with no imminent resolution: when the Chinese economy will bottom out and when the US Federal Reserve will raise interest rates.
Adding to that are other worries, including potential legislation to rein in pharmaceutical prices and the Volkswagen emissions scandal.
“You have a path of least resistance that is lower until you have some answers to the big questions,” Hogan said.
While the losses were broad-based, some sectors were especially bruised, including pharmaceuticals.
Valeant Pharmaceuticals International slumped 16.5 percent after Democratic lawmakers in Congress called for a subpoena for documents from the Canadian company allegedly related to related to huge drug price increases this year.
Bristol-Myers Squibb lost 4.6 percent, Dow member Pfizer dropped 3.4 percent and Gilead Sciences sank 5.3 percent.
Homebuilders also lost out after data from the National Association of Realtors showed US pending home sales fell in August. Lennar fell 5.7 percent, PulteGroup 4.7 percent and KB Home 8 percent.
Many technology stocks suffered drops, including Amazon (-3.7 percent), Facebook (-3.6 percent) and Netflix (-2.7 percent).
On the winning side was aluminum giant Alcoa, which jumped 5.7 percent on news it would split into two companies.
Also higher was Media General, which vaulted 22.3 percent on news it received an unsolicited buyout offer from Nexstar Broadcasting Group valued at about $4.1 billion. Nexstar dipped 2.3 percent.
Bond prices rose. The yield on the 10-year US Treasury fell to 2.10 percent from 2.17 percent Friday, while the 30-year dropped to 2.88 percent from 2.96 percent. Bond prices and yields move inversely.
