NEW YORK —
Signs that China’s economy is weakening and Europe’s is slowing sent U.S. stocks lower.
The price of crude oil dropped 2 percent Thursday to its lowest level in a week. That hurt oil stocks: Alpha Natural Resources, Consol Energy and Noble Energy each fell 4 percent.
The disconcerting economic news from overseas overshadowed other reports that suggested the U.S. economy is gaining momentum.
The Dow Jones industrial average closed down 78.48 points, or 0.6 percent, at 13,046.14.
The Standard & Poor’s 500 index fell 10.11, or 0.7 percent, at 1,392.78, while the Nasdaq composite index fell 12 points, or 0.4 percent, to 3,063.32.
“We are watching China closely,” said Scott Armiger, a portfolio manager at Christiana Trust in Greenville, Del. “There are still a lot of questions about the pace of economic growth. It’s not unusual to have a pullback in the market after a strong run. We’ve made a lot of money in less than six months.”
Eight out of 10 sectors declined in the S&P 500, led by energy and materials as investors worried about a drop in global demand for oil and raw materials.
China has released a string of worrisome economic reports recently. The latest, on Thursday, signaled that its manufacturing sector could be contracting. A manufacturing index compiled by HSBC fell to 48.1 in March from 49.6 in February. Figures below 50 indicate that manufacturing is contracting.
That’s a negative sign because growth in China has played a key role in shoring up the global economy since the financial crisis of 2008.
China is also the world’s largest consumer of raw materials, so a slowdown there would affect companies worldwide.
It didn’t help that another survey in Europe also pointed to slower growth. The purchasing managers’ index from Markit, a financial information company, fell to a below-forecast 48.8 points in March from 49.3 a month earlier. The index combines both the services and manufacturing sectors in Europe.
The poor economic news from abroad also hurt FedEx Corp.’s stock, which fell 4 percent. Chief financial officer Alan Graf said the global economic environment and higher fuel prices are driving customers to “trade down” or choose slower methods of shipping to save money, just as they did during the recession. Investors decided to focus on his comments, rather than the company’s stellar performance. FedEx’s quarterly profit more than doubled between December and February after it shipped more packages and charged higher prices.
