Dow Ends Week with 318-Point Drop
Business Roundup for Friday, January 24
NEW YORK (AP) —
Fear is back in the market.
Investors are worried about slower economic growth in China, a gloomier outlook for U.S. corporate profits and an end to easy money policies in the United States and Europe. They're also fretting over country-specific troubles around the world — from economic mismanagement in Argentina to political instability in Turkey.
Those fears converged to start a two-day rout in global markets this week, capped by a 318-point drop in the Dow Jones industrial average Friday. It was the blue-chip index's worst day since last June. The Dow plunged almost 500 points over the two-day stretch.
The Standard & Poor's 500 index fell 38 points, or 2.1 percent, to 1,790 Friday. The Nasdaq composite fell 90 points, or 2.2 percent, to 4,128.
Despite the sell-off, U.S. stocks remain near all-time highs after surging 30 percent last year. The S&P 500 is 3 percent below its record high of 1,848 on Jan. 15
U.S. stocks have not endured a correction — a drop of 10 percent or more over time — since October 2011.
In Asia Friday, Japan's Nikkei 225 slipped 1.9 percent to close at 15,391.56; Hong Kong's Hang Seng shed 1.2 percent to 22,450.06; and Seoul's Kospi dropped 0.4 percent to 1,940.56.
The turbulence coincides with a global economic shift: China and other emerging market economies appear to be running into trouble just as the developed economies of the United States and Europe finally show signs of renewed strength nearly five years after the end of the Great Recession.
The trouble began Thursday after a January survey showed a drop in Chinese manufacturing activity. Days earlier, China reported that its economic growth last year matched 2012 for the slowest pace since 1999.
"It is interesting how even a mild tremor in China's growth causes such anxiety around the world," said Eswar Prasad, professor of trade policy at Cornell University.
Slower growth in China is bad news for countries that supply oil, iron ore and other raw materials to the world's second-biggest economy. Some of those countries, such as Indonesia and South Africa, were already struggling with an outflow of capital as rising U.S. interest rates drew investors to the United States.
ST. LOUIS (AP) — As the Denver Broncos and Seattle Seahawks prepare for their Super Bowl showdown next weekend, a legal fight is playing out over the turf they'll be playing on. Taylor Turf Installation Inc. is suing the MetLife Stadium's operators and the company that hired the suburban St. Louis company. Taylor Turf is seeking more than $292,000 that it claims it is owed for hustling to install the New Jersey stadium's playing surface last summer.
NEW YORK (AP) — The head of the bank that incurred $6 billion in trading losses in 2012 nearly doubled his pay last year. JPMorgan Chase says Chairman and CEO Jamie Dimon's compensation for 2013 will total $20 million -- $18.5 million in stock options and a base salary of $1.5 million. The year before, his total compensation was $11.5 million. It was $23 million in each of the previous two years. The bank's board says Dimon's handling of the legal issues facing the lender was among the factors it considered in determining his pay.
DAVOS, Switzerland (AP) — The president of the European Central Bank is laying out the hope that the eurozone's economic recovery will pick up steam over the coming months. Mario Draghi told delegates at the World Economic Forum today that a stream of "solid" survey data points to better times ahead for the region, which is still grappling with debt, recession and sky-high unemployment.
NEW YORK (AP) — The frigid winter is setting the price of natural gas on fire. Record amounts of natural gas are being burned for heat and electricity — and it's so cold that drillers are struggling to produce enough to keep up with the high demand. The price has gained 25 percent in the past two weeks and is now near its highest level since June 2010. Natural gas is used by half the nation's households for heating.
CINCINNATI (AP) — Procter & Gamble says its second-quarter net income fell 16 percent, but its adjusted earnings beat Wall Street expectations. The world's largest consumer products maker is in the midst of a turnaround plan that includes focusing on its most profitable core businesses and cutting costs to save $10 billion by fiscal 2016.
WASHINGTON (AP) — The nation's union membership rate remains at its lowest level since the 1930s. The Bureau of Labor Statistics says the number of unionized workers grew by about 162,000 last year, to 14.5 million members. But union members still make up the same share of the workforce, 11.3 percent. The rate held steady in 2013 as gains among private sector workers were largely offset by losses in state and local government. In 2012, unions lost 400,000 members.
BUENOS AIRES, Argentina (AP) — Argentina's government is relaxing restrictions on the purchase of U.S. dollars following a sharp, two-day slide in the value of the local peso. Officials say Argentines will be able to buy dollars for personal savings, and the tax collected at the time of the exchange will fall to 20 percent from 35. Argentina had been steadily imposing tighter restrictions on dollars as its foreign exchange reserves slipped to the lowest level in seven years.
CARACAS, Venezuela (AP) — Venezuela is slashing by more than half the amount of U.S. dollars its citizens can buy and take with them to Florida. They'll now be allowed to buy a maximum of $700 annually for trips to Florida, compared with $2,500 a year allowed for trips to all other U.S. states. Venezuela is hoping to safeguard its dwindling supply of dollars. Venezuelans have been flocking to Florida and taking as much hard currency with them as they can under the country's rigid foreign currency exchange system.
TOKYO (AP) — Asian stock markets were mostly lower today on lingering concerns over the slowing Chinese economy. Early European trading also pointed to a lackluster end to the week. China's Shanghai Composite Index bucked the downward trend. Benchmark U.S. crude oil rose above $97.50. The dollar gained against the euro and fell against the yen.
ATHENS, Greece (AP) — Greece's finance minister says the country is still in tough negotiations with representatives of its international creditors over the course of its economic reform program. The minister insists there is no cause for concern and that the government is not being pressed to impose new austerity measures.
SEOUL, South Korea (AP) — South Korean electronics powerhouse Samsung says for the first time in more than two years, its quarterly net profit declined from the previous quarter. Samsung says its net earnings for the fourth quarter fell 11 percent from the third quarter to $6.8 billion. It's the first time in nine quarters that profits didn't grow from the previous quarter. Compared to a year earlier, earnings inched up 4 percent and sales rose 6 percent.
WASHINGTON (AP) — A government warning about the dangers of increased use of trains to transport crude oil is giving a boost to supporters of the long-delayed Keystone XL pipeline. U.S. and Canadian accident investigators are urging their governments to impose new safety rules on so-called oil trains, warning that a "major loss of life" could result from an accident involving the increasing use of trains to transport large amounts of crude oil. Pipeline supporters say the unusual joint warning highlights the need for the pipeline to carry oil from western Canada to U.S. refineries.
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