Wall St drops over 1.5 percent as global growth worries resurface

 Wall St drops over 1.5 percent as global growth worries resurface

By Shreyashi Sanyal

(Reuters) - U.S. stocks tumbled over 1.5 percent on Tuesday on concerns of global growth after the International Monetary Fund cut its growth forecast, China reported a sharp slowdown and a few U.S. companies gave disappointing earnings outlooks.

The three major indexes dropped to their session's low after the Financial Times reported the United States had turned down China's offer of preparatory trade talks.

All the 11 major S&P sectors were in the red, a retreat that threatened to snap a four-day rally and pull U.S. stocks from 1-month highs.

The IMF forecast that the global economy will grow at a lower pace than it had expected in October, mainly reflecting signs of weakness in Europe.

Meanwhile, China's economy cooled last quarter under pressure from faltering domestic demand and bruising U.S. tariffs, dragging 2018 growth to the lowest in nearly three decades.

"What's concerning is half the profits from the S&P 500 companies come from overseas and in particular from Europe and Asia. If there is significant signs of a slowdown in those regions then it will weigh on sentiment," said Michael Geraghty, equity strategist at Cornerstone Capital Group in New York City.

Adding to the worries, healthcare giant Johnson & Johnson and oilfield services provider Halliburton Co gave weak forecasts. J&J's 2.3 percent drop led healthcare stocks <.SPXHC> down 0.94 percent.

Halliburton fell 4.8 percent after it forecast lower revenue in key business areas in the first quarter. That, coupled with another drop in oil prices, dragged energy stocks <.SPSY> down 2.12 percent.

The tech sector <.SPLRCT> slid 1.48 percent, led by chipmakers, which have a huge exposure to China. The Philadelphia Semiconductor index <.SOX> dropped 2.67 percent. The trade-sensitive industrial sector <.SPLRCI> also dropped over 2 percent.

"It's a risk-off trade today and a lot has to do with just concerns over global growth," said Ryan Nauman, market strategist at Informa Financial Intelligence in Zephyr Cove, Nevada.

At 1:36 p.m. ET the Dow Jones Industrial Average <.DJI> was down 361.74 points, or 1.46 percent, at 24,344.61, the S&P 500 <.SPX> was down 40.95 points, or 1.53 percent, at 2,629.76 and the Nasdaq Composite <.IXIC> was down 133.68 points, or 1.87 percent, at 7,023.55.

The Dow slipped below its 50-day moving average price, just two day after reclaiming the closely watched level of near-term momentum. The S&P and the Nasdaq held above their 50-day averages.

Arconic Inc tumbled 16.3 percent, the most on the S&P, after the aluminum products maker said it was no longer pursuing a sale.

Stanley Black & Decker Inc dropped 14.3 percent after the hand tools and hardware maker gave a weak 2019 forecast.

EBay Inc rose 5.8 percent after hedge funds Elliott Management and Starboard Value pushed for changes, including the sale of some of the e-commerce company's businesses.

Declining issues outnumbered advancers for a 3.88-to-1 ratio on the NYSE and for a 2.89-to-1 ratio on the Nasdaq.

The S&P index recorded three new 52-week highs and one new low, while the Nasdaq recorded 18 new highs and 26 new lows.

(Reporting by Shreyashi Sanyal and additional reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur)

This story has not been edited by Firstpost staff and is generated by auto-feed.

The Great Diwali Discount!
Unlock 75% more savings this festive season. Get Moneycontrol Pro for a year for Rs 289 only.
Coupon code: DIWALI. Offer valid till 10th November, 2019 .

Updated Date: Jan 23, 2019 01:05:29 IST