U.S. stocks sink further; Johnson & Johnson nosedives

Marley Jay, The Associated Press</span>
Published Friday, December 14, 2018 11:36AM EST
Last Updated Friday, December 14, 2018 1:32PM EST

NEW YORK -- Stocks are staggering Friday after weak economic data from China has investors worrying about the global economy again. China's government said industrial output and retail sales both slowed in November.

In the U.S., health care products giant Johnson & Johnson plunged after Reuters reported that the company has known since the 1970s that its talc baby powder sometimes contained carcinogenic asbestos, a claim the company denied.

Technology companies slipped after software maker Adobe reported a smaller-than-expected profit and gave a weak earnings forecast.

KEEPING SCORE: The S&P 500 index lost 38 points, or 1.4 per cent, to 2,612 at 1 p.m. Eastern time. The Dow Jones Industrial Average retreated 413 points, or 1.7 per cent, to 24,183.

The Nasdaq composite slid 101 points, or 1.4 per cent, to 6,968. The Russell 2000 index of smaller-company stocks, which has taken bigger losses than the rest of the market in recent months, fell 11 points, or 0.8 per cent, to 1,421.

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. This month, however, the S&P 500 is down more than 5 per cent. That followed a small gain in November and a steep 6.9 per cent drop in October.

J&J PLUNGES: Johnson & Johnson dropped 8 per cent to $136.10, which put the Dow stalwart on pace for its biggest loss in 16 years. Its market value fell by $30 billion. Other health care companies also fell. Pfizer lost 1.5 per cent to $43.91 while biotech drugmaker Amgen gave up 2.2 per cent to $193.13.

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. It faces thousands of other lawsuits.

SLOWING GROWTH: China's industrial output and retail sales kept growing in November, but the pace of growth slowed down. That could be another sign that China's trade dispute with the U.S. and tighter lending conditions are chilling its economy. 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.

China also announced a 90-day suspension of tariff increases on U.S. cars, trucks and auto imports. It's part of a cease-fire that the Chinese and U.S. governments announced earlier this month to give them time to work on other aspects of the trade dispute.

Among technology companies, Apple dipped 2.4 per cent to $166.83 and Cisco Systems fell 3.2 per cent to $45.97. Adobe skidded 6.2 per cent to $232.70 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 1.7 per cent to $319.91 and 3M gave up 2.4 per cent to $197.36.

ENERGY: Oil prices again turned lower, as a slower global economy would weaken demand for oil and other fuels. Benchmark U.S. crude fell 2.4 per cent to $51.35 a barrel in New York. Brent crude, used to price international oils, dropped 2.1 per cent to $60.19 a barrel in London.

Energy companies also sagged. Exxon Mobil fell 1.7 per cent to $75.64 and Schlumberger fell 4.9 per cent to $39.02.

OVERSEAS: Germany's DAX declined 0.5 per cent and the CAC 40 in France declined 0.8 per cent. Britain's FTSE 100 fell 0.5 per cent.

Japan's Nikkei 225 index slid 2 per cent and the Kospi in South Korea lost 1.3 per cent. Hong Kong's Hang Seng was down 1.6 per cent.

BREXIT TROUBLES: 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 cancelled a scheduled vote earlier this week because it was clear Parliament wouldn't approve it. Britain's economy and financial markets face severe disruption without an agreement.

European bond prices rose and yields fell. Both the British pound and the euro weakened. The pound slipped to $1.2573 from $1.2660 and the euro fell to $1.1272 from $1.1367.

CAFFEINE HEADACHE: Starbucks slipped 2.5 per cent to $65.24 after the company's forecasts fell short of analyst expectations. Wholesale club company Costco also dropped in early trading following its quarter report, as the stock lost 7.8 per cent to $208.90.

BONDS: Bond prices edged higher. The yield on the 10-year Treasury note fell to 2.89 per cent 2.90 per cent.

DOLLAR DOWN: The dollar fell to 113.32 yen from 113.60 yen.

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AP Markets Writer Marley Jay contributed.

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