Stocks staggered to eight-month lows Friday after weak economic data from China and Europe set off more worries about the global economy. Mounting tensions in Europe over Britain’s impeding departure from the European Union also darkened traders’ moods.
The Dow Jones Industrial Average dropped as much as 563 points. On the benchmark S&P 500 index, health care and technology companies absorbed the worst losses. Johnson & Johnson plunged by the most in 16 years after Reuters reported that the company has known since the 1970s that its talc Baby Powder sometimes contained carcinogenic asbestos. The company denied the report.
China said industrial output and retail sales both slowed in November. That could be another sign that China’s trade dispute with the U.S. and tighter lending conditions are chilling its economy, which is the second-largest in the world. Meanwhile, purchasing managers in Europe signaled that economic growth was slipping.
Running out of steam?
Sameer Samana, senior global market strategist for Wells Fargo Investment Institute, said investors are concerned that weakness will make it way to the U.S. They’re wondering if the U.S. economy is likely to run out of steam sooner than they had thought.
“Market consensus has been that the next recession is probably in 2020 or beyond,” he said. Now, he said, the market is “really testing that assumption and trying to figure out whether it’s sooner.”
The S&P 500 index lost 50.59 points, or 1.9 percent, to 2,599.95, its lowest close since April 2. The Dow retreated 496.87 points, or 2 percent, to 24,100.51.
The Nasdaq composite slid 159.67 points, or 2.3 percent, to 6,910.66. The Russell 2000 index of smaller-company stocks fell 21.89 points, or 1.5 percent, to 1,410.81.
December is typically the best month of the year for stocks and Wall Street usually looks forward to a “Santa Claus rally” that adds to the year’s gains. With 10 trading days left this month, however, the S&P 500 is down 5.8 percent. That followed a small gain in November and a steep 6.9 percent drop in October.
Market value falls
Johnson & Johnson dropped 10 percent to $133 in very heavy trading. Its market value fell by $40 billion.
Reuters reported that court documents and test results show Johnson & Johnson has known for decades that its raw talc and finished Baby Powder sometimes contained asbestos, but that the company didn’t inform regulators or the public. The company called the story “false and inflammatory.”
In July the company lost a lawsuit from plaintiffs who argued that its products were linked to cases of ovarian cancer and mesothelioma. A St. Louis jury awarded plaintiffs $4.7 billion. Johnson & Johnson faces thousands of other lawsuits.
For more than 20 years, China has been one of the biggest contributors to growth in the global economy, and when investors see signs the Chinese economy is weakening, they expect it will affect other countries like the U.S. that sell things to China.
Protests hurt France
In Europe, the index of purchase managers fell in France, which is racked by protests, to a level that points toward economic contraction. Germany’s reading still pointed to growth, but it fell to its lowest level in four years.
Those reports canceled out some potential good news on trade: the Chinese government announced a 90-day suspension of tariff increases on U.S. cars, trucks and auto imports. It’s part of a cease-fire that China and the U.S. announced earlier this month to give them time to work on other issues.
Among technology companies, Apple dipped 3.2 percent to $165.48. Adobe skidded 7.3 percent to $230 after its fourth-quarter profit disappointed investors and it also forecast lower-than-expected earnings in the current fiscal year. Industrial companies sank as well. Boeing lost 2.1 percent to $318.75.
Oil prices again turned lower, as a slower global economy would weaken demand for oil and other fuels. Benchmark U.S. crude fell 2.6 percent to $51.20 a barrel in New York. Brent crude, used to price international oils, dropped 1.9 percent to settle at $60.28 a barrel in London.
European Union leaders rejected British Prime Minister Theresa May’s request to make changes to their deal covering Britain’s departure from the EU on March 29. British legislators aren’t satisfied with the terms May negotiated, and she canceled a scheduled vote earlier this week because it was clear Parliament wouldn’t approve it. Britain’s economy and financial markets across Europe face severe disruption without an agreement.
European bonds slide
European bond prices rose and yields fell. Both the British pound and the euro weakened. The pound slipped to $1.2579 from $1.2660 and the euro fell to $1.1303 from $1.1367.
Germany’s DAX declined 0.5 percent and the CAC 40 in France declined 0.8 percent. Britain’s FTSE 100 fell 0.5 percent.
Japan’s Nikkei 225 index slid 2 percent and the Kospi in South Korea lost 1.3 percent. Hong Kong’s Hang Seng was down 1.6 percent.
Bond prices edged higher. The yield on the 10-year Treasury note fell to 2.89 percent 2.90 percent.
In other commodities trading, wholesale gasoline lost 3 percent to $1.43 a gallon. Heating oil fell 1.7 percent to $1.85 a gallon and natural gas dropped 7.2 percent to $3.83 per 1,000 cubic feet.
Gold fell 0.5 percent to $1,241.40 an ounce. Silver dipped 1.5 percent to $14.64 an ounce. Copper was little changed at $2.77 a pound.
The dollar fell to 113.29 yen from 113.60 yen.
Nigeria’s President Muhammadu Buhari said the country’s economy was in “bad shape,” the governor of a northwestern state told reporters Friday after a meeting with governors from across the country.
Buhari will seek a second term in an election to be held in February in which the economy is likely to be a campaign issue.
Africa’s top oil producer last year emerged from its first recession in 25 years, caused by low crude prices, but growth remains sluggish.
“Mr. President, as usual, responded by telling us that the economy is in a bad shape and we have to come together and think and rethink on the way forward,” Abdulaziz Yari, who chairs the Nigeria Governors’ Forum, told reporters when asked how Buhari answered requests for a bailout to some states.
“Mr. President talked to us in the manner that we have a task ahead of us. So, we should tighten our belts and see how we can put the Nigerian economy in the right direction,” said Yari, governor of Zamfara state. He spoke to journalists in the capital, Abuja.
The main opposition candidate, businessman and former Vice President Atiku Abubakar, has criticized Buhari’s handling of the economy and said that, if elected, he would aim to double the size of the economy to $900 billion by 2025.
Nigeria’s economy grew by 1.81 percent in the third quarter of this year, the statistics office said Monday. And on Friday, it said consumer prices had risen 11.28 percent in November compared with a year ago.
The federal budget deficit surged to a record for the month of November of $204.9 billion, but a big part of the increase reflected a calendar quirk.
In its monthly budget report, the Treasury Department said Thursday that the deficit for November was $66.4 billion higher than the imbalance in November 2017.
But $44 billion of that figure reflected the fact that December benefits in many government entitlement programs were paid in November this year because Dec. 1 fell on a Saturday.
For the first two months of this budget year, the deficit totals $305.4 billion, up 51.4 percent from the same period last year. The Trump administration is projecting that this year’s deficit will top $1 trillion, reflecting increased government spending and the loss of revenue from a big tax cut.
The new report showed that the higher tariffs from President Donald Trump’s get-tough trade policies are showing up in the budget totals. Customs duties totaled $6 billion in November, up 99 percent from November 2017.
Trump has imposed penalty tariffs on steel and aluminum imports from a number of countries and on $250 billion of Chinese imports as the administration seeks to apply pressure to other countries to reduce their barriers to American exports. However, China and other nations have retaliated by imposing penalty tariffs on U.S. exports, sparking a tit-for-tat trade war.
The administration still believes it will prevail and is currently in talks with China over trade practices the administration feels are unfair to American companies and workers.
Three years of $1 trillion deficits
Last year’s budget deficit totaled $779 billion. The administration is projecting that this year’s deficit, for a budget year that runs from October through September, will total $1.09 trillion. The administration sees the deficit remaining above $1 trillion for three straight years.
The only time the government has run deficits of this size was for four years from 2009 through 2012 when the Obama administration was boosting spending to grapple with the 2008 financial crisis and the worst recession since the 1930s.
Trump has said that the new budget he will unveil next February will require 5 percent spending cuts for domestic agencies in a bid to trim future deficits. The administration is also counting on government revenues to be increased by faster economic growth from the $1.5 trillion tax cut passed a year ago.
The $204.9 billion deficit last month was the biggest deficit ever recorded in November, a month when the government normally runs a deficit. Outlays were also a record in the month of November.
Through the first two months of this budget year, revenues total $458.7 billion, 3.4 percent higher than the same period a year ago. Outlays totaled $764 billion, up 18.4 percent from the same period a year ago.
A gauge of world equities was little changed after giving up early gains on Thursday, continuing a pattern seen for the past several sessions, while the euro eased after the European Central Bank formally ended its bond purchasing scheme.
In the United States, the S&P and Nasdaq finished in the red while the Dow closed well off its session highs as cautious trade optimism faded.
Nervousness has heightened volatility in stocks recently, with a tendency for stocks to lose morning gains as the day wears on.
In Beijing, a commerce ministry spokesman said China and the United States were in close contact over trade, and any U.S. trade delegation would be welcome to visit.
Although signs of a trade thaw have been welcomed by investors, other worries have kept stocks from sustaining gains.
“It’s a market that’s been very nervous. Investors get excited in the morning and then their fears come back,” said Omar Aguilar, chief investment officer of equities at Charles Schwab Investment Management in San Francisco.
“We need a catalyst to get us a more consistent trend — it could be good economic data or more clarity on the Fed’s intentions for next year or more certainty in U.S.-China. I don’t think it’s going to happen any time soon.”
Dow Jones rises while S&P 500 dips
The Dow Jones Industrial Average rose 70.11 points, or 0.29 percent, to 24,597.38, the S&P 500 lost 0.53 points, or 0.02 percent, to 2,650.54 and the Nasdaq Composite dropped 27.98 points, or 0.39 percent, to 7,070.33.
U.S. economic data showed jobless claims fell last week to near 49-year lows, while import prices dropped as the cost of petroleum products tumbled. Shares in Europe edged lower to snap a two-session winning streak, as concerns about Britain’s exit from the European Union and euro zone growth outweighed a budget compromise in Italy.
The pan-European STOXX 600 index lost 0.17 percent and MSCI’s gauge of stocks across the globe gained 0.05 percent.
Help from ECB to continue
Britain’s weakened prime minister, Theresa May, survived a late night no-confidence vote, and then said she did not expect a quick breakthrough in Brexit talks that would help get the deal through parliament.
The ECB officially ended its post-crisis asset purchase program but promised to keep feeding stimulus into an economy struggling with an unexpected slowdown and political turmoil.
The euro and sterling were choppy on the Brexit uncertainty and in the wake of comments from ECB President Mario Draghi investors viewed as dovish following the policy announcement.
Dollar index slightly up
The dollar index rose 0.02 percent, with the euro down 0.04 percent to $1.1363.
Sterling, rebounding from earlier declines, was last trading at $1.2662, up 0.26 percent on the day.
Oil prices were higher after data showed inventory declines in the United States and as investors began to expect the global oil market could have a deficit sooner than previously thought.
U.S. crude settled up 2.8 percent at $52.58 per barrel and Brent was last at $61.45, up 2.16 percent.
Apple will build a $1 billion campus in Austin, Texas, break ground on smaller locations in Seattle, San Diego and Culver City, California, and over the next three years expand in Pittsburgh, New York and Colorado.
The tech giant said Thursday that the new campus in Austin, less than a mile from existing Apple facilities, will open with 5,000 positions in engineering, research and development, operations, finance, sales and customer support. The site, according to Apple, will have the capacity to eventually accommodate 15,000 employees.
The three other new locations will have more than 1,000 employees each.
Early this year, Apple said that it would make more than $30 billion in capital expenditures in the U.S. over the next five years. That, the company said in January, would create more than 20,000 new jobs at existing and new campuses that Apple planned to build.
Where U.S. companies open new facilities or plants has always had the potential for public and political backlash.
That potential has intensified under the Trump administration, which has pushed companies to keep more of their operations inside the country’s borders.
While CEO Tim Cook has steered mostly clear President Donald Trump’s ire, Apple did receive some push back three months ago from the White House.
Apple sent a letter to the U.S. trade representative warning that the burgeoning trade war with China and rising tariffs could force higher prices for U.S. consumers.
Trump in a tweet told Apple to start making its products in the U.S., and not China.
Apple uses a lot of facilities overseas to produce components and its products, including China.
Top tech executives from Google, Microsoft, IBM, Oracle and Qualcomm gathered at the White House earlier this month to discuss strained ties between the administration and the industry, and trade tensions with China. Cook was not among them, nor was Amazon’s Jeff Bezos.
There are already 6,000 Apple employees in Austin, its largest operation outside of company headquarters in Cupertino, California, where 37,000 people are employed.
“Apple has been a vital part of the Austin community for a quarter century, and we are thrilled that they are deepening their investment in our people and the city we love,” said Austin Mayor Steve Adler in a prepared statement Thursday.
Apple said nearly a year ago that it would begin canvassing the U.S. for another campus.
Cities offered incentives to lure the company, but Cook avoided a high-profile competition that pitted them against one another as Amazon did over the last year and a half.
Amazon, too, expands
Amazon announced in November after a 14-month search it had selected Long Island City, Queens, and Arlington, Virginia, as the joint winners. Each site will employ around 25,000 people.
Cities are eager to bring in more tech employers because companies like Apple and Amazon ladle out six-figure salaries to engineers and other skilled workers.
The infusion of thousands of new and highly paid residents can ripple through an economy, with those employees filling restaurants, theaters, buying property and paying taxes.
Annual pay will vary at the new locations, but Apple workers in Cupertino have an average annual salary of about $125,000, according to a report the company submitted to the city.
Wall Street stocks finished higher on Wednesday due to improved hopes for the US-China trade talks.
The Dow Jones Industrial Average added 0.6 percent at 24,527.27.
The broad-based S&P 500 advanced 0.5 percent to 2,651.07, while the tech-rich Nasdaq Composite Index jumped 1.0 percent to 7,098.31.
Wall Street stocks have been volatile in recent weeks in part due to unpredictable and ambiguous events connected to the Beijing-Washington trade negotiations.
The latest indicators have been more upbeat, with a Chinese Huawei executive granted bail in a Canadian court in a closely-watched legal case and confirmation from Commerce Secretary Wilbur Ross in a television interview that Beijing had offered to cut tariffs on autos imported from the United States and resume soybean purchases.
Unlike the last two sessions, there were no major gyrations lower on Wednesday. But stocks still finished well below their session highs, with the Dow falling about 300 points from its peak in the last three hours of trading.
Gainers included some equities that have been seen as vulnerable to a trade war with China. Boeing advanced 1.5 percent, Caterpillar 1.7 percent and Deere 0.8 percent.
Tech shares were also upward-bound, with Google parent Alphabet winning 1.1 percent, Amazon 1.2 percent and Netflix 3.6 percent.
Tencent Music, in its first session after going public, jumped 7.7 percent a day after the music streaming company raised $1.1 billion in an initial public offering.
Wood consumption — including logging and the production of charcoal — is a leading cause of forest degradation in Africa. In some of Kenya’s coastal regions, recurring droughts have made the problem even worse. Now, farmers in those regions are planting trees, putting their once-barren land to use in a venture that enables them to earn a living and conserve the environment at the same time.
At Be Sulubu Tezo, in Kilifi county, Kenya, Kanze Kahindi Mbogo tends to her tree farm. She thins out the trees whose wood is now strong enough for her to sell for home-building and making fences.
The money she makes is for her six children.
A better life
Kahindi says she has been able to educate her children, pay a couple of debts and do lots of other things. She adds she was also able to take one of her sons to college and right now he is a driver.
Before growing trees, putting food on the table was difficult in this land where droughts are common and crops often fail.
With the help of NGOs and entrepreneurs, farmers are learning how agroforestry can make them money and at the same time save the environment. One of those firms is Komaza, a Kenyan firm that is working with 14,000 farmers to plant drought-resistant trees for harvest, reducing the drive to deforest.
Help with the harvest
“Farmers are able to nurture the seedlings into trees, and then the trees become fully grown trees ready to harvest,” said Allan Ongang’a, a manager at Komaza. “Once they are ready for harvest we have the operations team from the forestry department that identify trees that are ready for harvest, agree with the farmers on a fair price, the trees are marked and harvested.”
The firm trains farmers on cultivation and selective harvesting.
But not all farmers have the resources to plant a tree and wait for it to grow, so some farm subsistence crops among the trees. Researchers say this arrangement counters the effects of climate change.
“Trees end up absorbing carbon dioxide when they making their food and therefore essentially the trees are actually getting to bring carbon from the atmosphere into the tree stem and therefore on land,” explained researcher John Recha with the Climate Change Agriculture and Food Security Program, a private entity in Nairobi.. “That means there is the benefit of reducing greenhouse gas emission through more enhanced agroforestry systems.”
For these Kenyan farmers, environmentalism begins to make sense when it starts to translate into a sustainable income.
Former Malaysian Prime Minister Najib Razak was charged Wednesday with tampering with the final audit report into a defunct state investment fund, adding to a long list of corruption allegations against him since his ouster in May elections.
Najib was charged along with Arul Kanda Kandasamy, the former head of the 1MDB fund, which is being investigated in the U.S. and other countries for alleged cross-border embezzlement and money laundering.
Najib pleaded not guilty to abusing power to order the modification of the report in February 2016 before it was presented to the Public Accounts Committee, in order to protect himself from disciplinary and legal action. Kandasamy, who was detained overnight by anti-graft officials, pleaded not guilty to abetting Najib.
The charges came after the auditor-general revealed last month that some details had been removed from the 1MDB report. Kandasamy led 1MDB from 2015 until he was terminated in June. The two men were released on bail, and face up to 20 years in prison if found guilty.
Najib set up 1MDB when he took power in 2009 to promote economic development, but the fund amassed billions in debts. U.S. investigators say Najib’s associates stole and laundered $4.5 billion from the fund, including some that landed in Najib’s bank account.
Public anger over the scandal led to the defeat of Najib’s long-ruling coalition in May 9 elections and ushered in the first change of power since Malaysia gained independence from Britain in 1957.
The new government reopened the investigations stifled under Najib’s rule. Najib, his wife and several top-ranking former government officials have been charged with multiple counts of corruption, criminal breach of trust and money laundering.
Najib, 65, has accused the new government of political vengeance.
Cash-strapped Avianca Brasil, the country’s fourth-largest airline, on Tuesday sought bankruptcy protection from creditors but reassured passengers that flights will continue.
“Due to resistance from the lessors (of their aircraft) to reaching a friendly settlement, we have filed seeking protection from creditors, to protect clients and passengers,” a company statement said.
Operations are not expected to be affected and “passengers can have complete peace of mind to make reservations and buy tickets, since all sales will be honored and flights will be operating,” it said.
The airline has debts of almost 493 million reais ($127 million) with multiple creditors, the business daily Valor reported.
Avianca Brasil, a brand of Oceanair Linhas Aereas SA (Oceanair), is not part of the group Avianca Holdings S.A, based in Colombia.
But both are parts of a holding company led by the same investor, German Efromovich.
Brazilian media said the carrier is in debt to creditors including state oil giant Petrobras and Sao Paulo’s Guarulhos Airport.
Avianca Brasil serves domestic and international routes with 60 jets. The company is facing lawsuits for the return of 26 planes and 52 engines, Valor said.
The airline recorded net losses in the first half of the year of 175.6 million reais, up 24.4 percent from the same period last year.
Greece’s parliament on Tuesday voted to scrap plans to cut state pensions, in a motion led by the left-led governing coalition hoping to shore up its flagging support ahead of a general election next year.
Athens agreed two years ago to cut pensions in 2019, in an attempt to placate lenders and get the International Monetary Fund (IMF) to back a third financial bailout the country clinched with its euro zone partners in 2015.
Eventually the bailout, worth up to 86 billion euros, expired in August without IMF assistance, and Athens has said better-than-expected public finances enable it to rescind the planned cutbacks.
The European Commission has approved the government’s decision.
“The time has come for people to be rewarded for their sacrifices,” Prime Minister Alexis Tsipras told lawmakers ahead of the vote, calling the step a “necessary breath for the people of labor … who saw their pensions and their dignity hurt.”
Pensioners, who are in many households the only people with an income due to the highest unemployment rate in the eurozone, have seen earnings shrink by up to 40 percent since Greece toppled into crisis in late 2009.
Tsipras’ term ends in 2019. His Syriza party is trailing the conservative New Democracy by about 10 points in opinion polls.
Since 2010, Greece has signed up to three international bailouts totaling almost 290 billion euros, and will remain heavily indebted for years to come.
The country is monitored by its eurozone partners and the IMF to ensure it does not veer off post-bailout targets aimed at maintaining high budget surpluses in coming years.
New Democracy (ND) accused the government of increasing taxes and handing out benefits from budget revenues to win votes.
“You are wearing the mask of the philanthropist just to tip people from their own savings,” ND leader Kyriakos Mitsotakis told Tsipras in parliament.