US Stocks Decline on Global Economic Worries

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US Stocks Decline on Global Economic Worries

US stocks declined on Wednesday putting equities on pace for a fourth straight session of losses as a forecast from World Bank sparked concerns about the weak economies, with US retail sales for December missing expectations.

Investors have been concerned about the softness in China, Japan, and Europe for several months now. While growth in US has been buoyant, it is unclear whether it can withstand the overseas drag.

The slower economic growth dims the prospects for growth in corporate profit, the drive of the stock-market gains.

According to The Wall Street Journal, the Dow Jones Industrial Average dropped 1.1% or 186 points to 17,426. The Dow had dropped to a low of 17,375.91 earlier. The S&P 500 lost 0.8% or 16 points to 2001 while the Nasdaq Composite Index dropped 0.5% or 24 points to 4,636.

Retail sales dropped 0.9% in December from November, as reported by the Commerce Department on Wednesday.

State Street Global Advisors’ chief investment strategist, Michael Arone said, “The retail sales number was disappointing. It’s going to take a little time for the declines in oil to find their way into spending.”

The S&P retail index dropped 1.5%. Reuters quoted chief investment officer at Wedbush Equity Management LLC, Stephen Massocca as having said, “Anything that is remotely related to commodities or extracting anything from the ground is definitely heavily for sale, so there are deflationary overtones there.”

He added, “There is some debate about how ugly this retail sales number is, but at the end of the day you can’t call it good, so it shows the economy is maybe not as chipper as people thought it was.”

Bank shares lost ground with JP Morgan Chase & Co dropping 4.4% to $56.24 after the largest bank in the US by assets reported a drop of 6.6% in quarterly profit. Wells Fargo & Co dropped 1.5% to $51.09 after it posted quarterly results.

To contact the reporter of the story: Jonathan Millet at john@forexminute.com