Major U.S. stock indexes fell Friday, putting them on pace for their worst week since December, as swelling concerns about slowing global and U.S. economic growth further hindered this year’s rally.
Data showing a sharp slowdown in U.S. hiring growth last month rounded out a troubling week for investors that also coincided with the 10th anniversary of the bull market.
Questions around the fate of a trade pact between the U.S. and China, a Thursday decision by the European Central Bank to deploy additional stimulus and a Friday report showing Chinese exports falling combined to exacerbate investors’ fears that major economies around the world may be decelerating faster than expected.
Investors sold equities broadly, knocking all three major indexes down at least 2.6% since Monday, their worst weekly performance since late December.
The downbeat performance comes on the eve of the bull market turning 10 years old. Saturday will mark the 3,653rd day since the S&P 500 began its bull run in the wake of the financial crisis. Although it is the longest bull rally by some measures, the broad index’s more-than-300% rise since 2009 ranks as its third-biggest ever.
But instead of celebrating the milestone Friday, money managers were trying to decipher the mixed jobs report and other economic data to determine how much longer the rally can last.
“It’s anyone’s guess at this point,” said Tony Roth, chief investment officer at Wilmington Trust, of whether the U.S. economy is truly slowing down. “But we’re seeing a very acute deceleration in Europe and a substantial slowdown in China.” The Dow Jones Industrial Average was down 161 points, or 0.6%, to 25317 in recent trading, while the S&P 500 slid 0.8%. The Nasdaq Composite also declined, shedding 0.8%.
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Friday’s declines came after Labor Department data showed U.S. nonfarm payrolls rose a seasonally adjusted 20,000 in February, missing economists’ expectations of 180,000 new jobs.
Still, the report wasn’t all gloomy. The unemployment rate ticked down to 3.8% from 4% a month earlier, while wages rose 3.4% from a year earlier—the strongest pace since April 2009. The mixed data likely helped protect stocks against steeper losses, analysts said, adding that there was some question whether the government shutdown or a recent major snowstorm contributed to the weaker-than-expected jobs print.
“Setting aside job creation, overall labor market conditions remain relatively tight,” said Jim Baird, chief investment officer of Plante Moran Financial Advisors. “The real question is the degree to which job creation softens alongside the deceleration in the pace of growth in the broad economy.”
The relative stability in jobless claims provides some assurances the economy isn’t so weak, Mr. Baird said, but investors will likely look to the March jobs report for reassurance.
On Friday, all 11 major S&P 500 sectors fell Friday, from high-growth technology stocks to industrials to equity havens that pay dividends, such as utilities. Energy stocks bore the brunt of Friday’s selling, with the sector falling 2.2% in recent trading alongside a nearly 3% slide in crude oil prices.
Major indexes overseas haven’t fared any better. Shares in China suffered their biggest losses since October after a report Friday showed Chinese exports slid 20.7% in February from a year earlier—a much steeper decline than economists had expected. Imports tumbled 5.2%, also a bigger drop than expected.
The Shanghai Composite Index fell 4.4% and its smaller Shenzhen counterpart dropped 3.8%, their biggest single-day falls in five months. Meanwhile, in Europe, plans by the ECB to deploy additional stimulus Thursday suggested policy makers had become increasingly concerned about the slowdown across the region, analysts said.
The Stoxx Europe 600 fell 0.9% Friday, extending the index’s weekly loss to 1%—also its largest pullback since December.Despite the concerned response from markets, some welcomed the actions taken by ECB President Mario Draghi as necessary to guard against a worsening of the global slowdown.
“It seems like Draghi, at least, wanted to be seen as decisive. Now is better to act, sooner, pre-emptive, rather than later,” said Geoffrey Yu, head of the U.K. investment office of UBS Wealth Management. While the ECB’s moves showed they were concerned about the slowdown, their actions should be read as vigilance, rather than anxiety, he added. “They are erring on the side of caution.”
Jim Reid, an analyst at Deutsche Bank, said in a note that markets interpreted the ECB’s stimulus measures as “nowhere near substantial enough,” considering the downward revisions of growth forecasts.