By Stephen Culp
NEW YORK (Reuters) – Wall Street fell on Friday as negative headlines about Johnson & Johnson and Boeing, along with bleak economic data from China, soured investor risk appetite and offset generally positive corporate earnings.
All three major U.S. stock averages ended the session in the red, but the S&P 500 and the Nasdaq posted weekly gains. The blue-chip Dow was nominally lower than last week’s close.
Boeing dropped 6.8% after Reuters reported that text messages between two employees suggested the planemaker misled the Federal Aviation Administration about the safety of the grounded 737 MAX aircraft.
Johnson & Johnson announced it would recall baby powder in the United States after regulators found trace amounts of asbestos in a sample, sending its shares falling 6.2%.
Growth of China’s gross domestic product slowed to its weakest pace in nearly 30 years as the bruising trade war with the United States took its toll, stoking fears of slowdown contagion.
The International Monetary Fund has lowered its forecast for global growth this year to 3%, which would mark the slowest expansion since the financial crisis.
“There’s no question that there’s signs out there that the economy is weakening,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
Today’s market weakness “has to do with (GDP) news out of China, Boeing and Johnson & Johnson,” Cardillo added, saying “market sentiment in terms of earnings is positive.”
Third-quarter earnings season has hit full stride, with 73 companies in the S&P 500 having reported. Of those, 83.6% have come in above average estimates, according to Refinitiv data.
Still, analysts currently see S&P 500 earnings dropping by 3.1% compared with last year, which would mark the first contraction since the earnings recession that ended mid-2016.
American Express Co
Kansas City Southern
Next week, market participants look forward to high profile results from Procter & Gamble Co
The Dow Jones Industrial Average <.DJI> fell 255.68 points, or 0.95%, to 26,770.2, the S&P 500 <.SPX> lost 11.75 points, or 0.39%, to 2,986.2 and the Nasdaq Composite <.IXIC> dropped 67.31 points, or 0.83%, to 8,089.54.
Of the 11 major sectors in the S&P 500, seven closed in the red, with tech <.SPLRCT>, communications services <.SPLRCL> and industrials <.SPLRCI> suffering the biggest percentage declines.
Declining issues outnumbered advancing ones on the NYSE by a 1.03-to-1 ratio; on Nasdaq, a 1.41-to-1 ratio favored decliners.
The S&P 500 posted 29 new 52-week highs and two new lows; the Nasdaq Composite recorded 51 new highs and 59 new lows.
Volume on U.S. exchanges was 6.24 billion shares, compared with the 6.55 billion average over the last 20 trading days.
(Reporting by Stephen Culp; Editing by Tom Brown)