Wall Street capped a turbulent week of trading Friday with the biggest weekly loss since March as traders fret over rising trade tensions between Washington and Beijing and signals of slower economic growth.
The latest wave of selling erased more than 550 points from the Dow Jones Industrial Average, bringing its three-day loss to more than 1,400. For the week, major indexes are down more than 4 percent.
Worries that the testy U.S.-China trade dispute and higher interest rates will slow the economy have made investors uneasy, leading to volatile swings in the market from one day to the next.
On Monday, news that the U.S. and China had agreed to a 90-day truce in their escalating trade conflict drove stocks sharply higher, adding to strong gains the week before. The next day, as doubts mounted over the likelihood of a swift resolution to the trade dispute, stocks sank.
That sell-off extended to Thursday, when U.S. stock markets reopened for trading after a national day of mourning for former President George H.W. Bush. An early plunge knocked 700 points off the Dow as investors worried the arrest of a senior Chinese technology company official would undermine trade negotiations between Washington and Beijing, but stocks bounced nearly all the way back by the end of the day on news that the Federal Reserve was considering a wait-and-see approach to its interest rate hikes.
That optimism fueled a rally early Friday, which faded into another sharp drop.
"We're in a market where investors just want to sell any upside that they see," said Lindsey Bell, investment strategist at CFRA. "The volatility we've seen the last couple of weeks has been pretty extreme in both directions."
The S&P 500 index fell 2.3 percent. The index has ended lower three out of the last four weeks. The Dow dropped 2.2 percent. The tech-heavy Nasdaq composite slid 3 percent.
The S&P 500 and Dow are now in the red for the year again. The Nasdaq was holding on to a modest gain.
The current bull market for stocks, which began in March 2009, has shown signs of sputtering this year, with the S&P 500 entering into a correction, or drop of 10 percent from a recent high, twice this year. The index is now down 10.2 percent from its all-time high on Sept. 20.
The market is now on track for its worst year since 2008, when the S&P 500 ended with a 38.5 percent loss.
Volatility has gripped the market since early October, reflecting investors' worries that the Federal Reserve might raise interest rates too aggressively as it tries to keep inflation in check, potentially slowing economic growth.
"The Fed has taken the punch bowl away in getting back to rates where they are today," said Doug Cote, chief market strategist for Voya Investment Management. "We're also going to get back to more normal volatility."
Traders also fear that a prolonged trade dispute between the U.S. and China could crimp corporate profits and that tariffs will raise costs for businesses and consumers. Uncertainty over those issues helped drive the market's sell-off this week.
The U.S. has announced tariffs on $250 billion in Chinese imports this year, with the tax rate on many products set to rise Jan. 1, while China put new taxes on $110 billion in U.S. goods.
Last weekend, President Donald Trump and his Chinese counterpart Xi Jinping agreed over dinner at the G-20 summit in Argentina to a temporary, 90-day stand-down in the two nations' trade conflict to allow time to smooth out a dispute over Chinese technology policies that the U.S. and other trading partners consider predatory.
Trump agreed to hold off on plans to raise tariffs on $200 billion in Chinese goods. In return, Xi agreed to buy a "very substantial amount" of agricultural, energy and industrial products from the U.S. to reduce its large trade deficit with China.
The development, and the boost it gave the market, didn't last, however. Analysts began to question whether the Trump-Xi talks put both sides any closer to resolving their differences.
The arrest of a senior Chinese technology executive, which was disclosed on Wednesday, also could complicate trade negotiations.
Canadian authorities arrested Meng Wanzhou, chief financial officer at China's Huawei Technologies, for possible extradition to the U.S. Meng, a prominent member of Chinese society, is suspected of trying to evade U.S. trade curbs on Iran.
Technology companies would have much to lose if trade relations with China worsen.
Apple, for instance, relies on China for 18 percent of its sales, according to FactSet. Chipmakers rely on China even more. Nearly 23 percent of Intel's revenue comes from mainland China.
That's one reason technology stocks, which have accounted for much of the market's gains in recent years, led the market's broad slide Friday. Apple shares dropped 3.6 percent to $168.49 Friday, while chipmaker Advanced Micro Devices slid 8.6 percent to $19.46.
Health care sector stocks, the biggest gainer in the S&P 500 this year, took some of the heaviest losses Friday. Medical device company Cooper lost 12.3 percent to $243.01.
Utilities, which investors favor when they're fearful, eked out a slight gain. PPL Corp. gained 2.8 percent to $31.09.
Oil prices rose after OPEC countries agreed to reduce global oil production by 1.2 million barrels a day for six months, beginning in January. The move would include a reduction of 800,000 barrels per day from OPEC countries and 400,000 barrels per day from Russia and other non-OPEC nations.
The news, which had been widely anticipated, pushed crude oil prices higher. U.S. benchmark crude rose 2.2 percent to $52.61 a barrel in New York. Brent crude, used to price international oils, gained 2.7 percent to $61.67 a barrel in London.
The Labor Department said U.S. employers added 155,000 jobs in November, a slowdown from recent months but enough to suggest that the economy is expanding at a solid pace despite sharp gyrations in the stock market. The unemployment rate remained at 3.7 percent, nearly a five-decade low, for the third straight month.
Bond prices rose, sending yields slightly lower. The yield on the 10-year Treasury fell to 2.86 percent from 2.87 percent late Thursday.
The decline in bond yields, which affect interest rates on mortgages and other consumer loans, weighed on banks, which make more money when rates are rising. Morgan Stanley slid 3 percent to $41.32.
In other trading Friday:
- The S&P 500 index fell 62.87 points, or 2.3 percent, to 2,633.08. The index has ended lower three out of the last four weeks.
- The Dow dropped 558.72 points, or 2.2 percent, to 24,388.95.
- The Nasdaq composite slid 219.01 points, or 3 percent, to 6,969.25.
- The Russell 2000 index of small-company stocks gave up 29.32 points, or 2 percent, to 1,448.09.
- The dollar fell to 112.64 yen from 112.65 yen late Thursday. The euro strengthened to $1.1422 from $1.1373.
- Gold gained 0.7 percent to $1,252.60 an ounce. Silver climbed 1.3 percent to $14.70 an ounce. Copper added 0.6 percent to $2.76 a pound.
- Wholesale gasoline climbed 3.7 percent to $1.49 a gallon. Heating oil rose 1.5 percent to $1.89 a gallon. Natural gas gained 3.7 percent to $4.49 per 1,000 cubic feet.
- In Europe, Germany's DAX dipped 0.2 percent while the CAC 40 in France rose 0.7 percent. Britain's FTSE 100 jumped 1.1 percent. Major indexes in Asia finished mostly higher.
- Japan's benchmark Nikkei 225 added 0.8 percent and Australia's S&P/ASX 200 gained 0.4 percent. South Korea's Kospi rose 0.3 percent. Hong Kong's Hang Seng gave up 0.3 percent.
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