Wall Street Retreats, as China’s Weakening Growth Pulls Shares and Oil Lower

By THE ASSOCIATED PRESSSEPT. 22, 2014

(Published in the Wall Street Journal) 

Worries about the outlook for growth in China and a slide in the price of oil pushed the stock market to its biggest loss in almost seven weeks on Monday.

Investors are nervous about China after a run of soft economic data that suggested growth there, the No. 2 economy after the United States, was slowing. The worries about China helped push down the price of oil, and that in turn weighed on energy stocks.

The stock market has struggled to gain traction this month as investors have considered signs of an improving economy in the United States against evidence of slowing growth in Europe and Asia.

“We’ve got China weighing down on stocks,” said Kristina Hooper, United States investment strategist at Allianz Global Investors. “The lack of transparency there always creates greater uncertainty.”

The Standard & Poor’s 500-stock index dropped 16.11 points, or 0.8 percent, to 1,994.29. The loss was the biggest one-day decline for the index since Aug. 5. The index is down 0.5 percent this month.

The Dow Jones industrial average fell 107.06 points, or 0.6 percent, to 17,172.68. The Nasdaq composite index dropped 52.1 points, or 1.1 percent, to 4,527.69.

The losses were broad, and all 10 industry sectors that make up the S.&P. 500 declined. Energy stocks were among the biggest decliners, slumping 1.4 percent as the price of oil fell. Companies that rely the most on consumer spending, like entertainment and media conglomerates and retailers, fell the most.

The price of oil dropped in the face of concerns that Libya’s production was picking up at a time when global economic indicators pointed to weaker demand from countries including China. Crude oil for November delivery fell 78 cents to $90.87 a barrel.

Smaller companies were also among the biggest decliners as investors shunned the riskier parts of the market.

The Russell 2000, an index that tracks small-company stocks, fell 1.5 percent, more than other indexes. The Russell has dropped 3 percent so far this year, compared with gains of 7.9 percent for the S.&P.

Still, analysts noted that the economy appeared to be strengthening, creating a favorable environment for stocks.

“The fundamentals in the U.S. have been coming in strong, beyond expectations,” said Doug Cote, chief market strategist at Voya Investment Management. “It’s a modest pullback. If anything I would take it as an opportunity to build positions.”

Stocks were also hurt on Monday by a report that fewer Americans bought homes in August as investors retreated from real estate and first-time buyers remained scarce. The National Association of Realtors said sales of existing homes fell 1.8 percent to a seasonally adjusted annual rate of 5.05 million. That followed four months of gains. August sales fell from a July rate of 5.14 million, a figure that was revised slightly downward.

In the bond market, interest rates eased. The yield on the Treasury’s 10-year government note dipped to 2.57 percent, from 2.58 percent late Friday.