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Stocks, Bond Yields Fall Sharply       03/22 16:12

   Wall Street was roiled Friday by new signs that global economic growth is 

   (AP) -- Wall Street was roiled Friday by new signs that global economic 
growth is slowing. The jitters triggered a sell-off in stocks and sent bond 
yields sharply lower, flashing a possible recession warning.

   The wave of selling knocked 460 points off the Dow Jones Industrial Average 
and gave the benchmark S&P 500 index its worst day since Jan. 3. The Russell 
2000 index of smaller company stocks fell more than the rest of the market as 
traders offloaded risker assets.

   Worried investors shifted money into bonds, which sent yields much lower. 
The yield on the 10-year Treasury dropped to 2.43 percent from 2.54 percent 
late Thursday, a big move.

   The slide in bond yields hurt bank stocks which, along with technology 
companies, accounted for much of the broad decline in stocks. The utilities 
sector was the only one to eke out a gain.

   "What's really giving investors concern today is this weak global economic 
data here in the U.S. and in Europe," said Jeff Kravetz, regional investment 
director for U.S. Bank Wealth Management.

   Smaller company stocks are often the first to be sold by investors looking 
to reduce risk, which explains why the Russell 2000 was down more than the rest 
of the market. Small companies, which are more dependent on the U.S. economy 
than big multinationals, tend so suffer more in economic downturns.

   "When investors feel nervous about the economy and the outlook for the stock 
market, they want to sell the riskiest types of stocks, and that would 
definitely be small caps," Kravetz said.

   The S&P 500 index dropped 54.17 points, or 1.9 percent, to 2,800.71. The Dow 
gave up 460.19 points, or 1.8 percent, to 25,502.32.

   The Nasdaq composite, which is heavily weighted with technology stocks, slid 
196.29 points, or 2.5 percent, to 7,642.67. The Russell 2000 lost 56.49 points, 
or 3.6 percent, to 1,505.92.

   European stocks also finished sharply lower Friday. 

   Despite wavering from gains to losses throughout the week, the S&P 500 index 
is still up more than 11 percent so far in 2019, which still counts as a 
blockbuster start to a year.

   The fear that gripped investors Friday was fueled by a steadily dimming 
outlook for the global economy. China, the world's second-largest economy after 
the United States, is weakening. And other economies that depend heavily on 
purchases in China have suffered as a result.

   Factory production in the euro currency alliance, for instance, has fallen 
at its steepest rate in about six years. In Germany, Europe's largest economy, 
a survey of purchasing manager manufacturers posted its sharpest production 
drop in nearly six years. Orders to German factories have also tumbled.

   Key bond yields fell this week to their lowest levels in more than a year 
after the Federal Reserve said it was seeing slower growth in the economy and 
no longer expected to raise interest rates this year.

   The yield on the benchmark 10-year Treasury note, which is used to set rates 
on mortgages and many other kinds of loans, is now sharply lower from its 
recent high of 3.23 percent in early October.

   In another worrying sign, the yield on the 10-year Treasury note fell Friday 
below the yield on the three-month Treasury bill. When that kind of "inversion" 
in bond yields occurs, economists fear that it can signal a recession within 
the coming year. That signal isn't always correct, however.

   The prospects of slowing global economic growth has motivated investors to 
rebalance their holdings as they "digest the new reality," said Marina 
Severinovsky, investment strategist at Schroeders. "We're sort of coming back 
to Earth."

   Central banks have been positioning themselves to deal with the slowdown, 
she said, and that includes the Federal Reserve's expectations for no rate 
increases this year.

   Earlier this month the European Central Bank said it would push back the 
earliest date for interest rate increases. It also said it would offer 
ultra-cheap loans to banks, supporting their ability to keep lending.

   "It's very positive that, not just the Fed, but other policy makers have 
acknowledged the situation is kind of dangerous on the global slowdown and are 
taking action," Severinovsky said.

   The decline in bond yields threatened the profitability of banks because it 
forces them to charge lower interest rates on loans. Bank of America slid 4.2 
percent, JPMorgan Chase lost 3 percent, Citigroup dropped 4.6 percent and Wells 
Fargo fell 3.1 percent.

   Technology companies, which would stand to lose more than other sectors in a 
slowing economy, also took heavy losses. Western Digital gave up 6.5 percent 
and chipmaker Advanced Micro Devices slid 5.4 percent.

   Boeing dropped 2.8 percent after Indonesia's flag carrier became the first 
airline to seek to cancel an order of 737 Max 8 jets, which have been involved 
in two fatal crashes in the past six months.

   Nike stumbled 6.6 percent after disappointing sales in its vital North 
America market fell short of analysts' forecasts and it warned of a sales 

   Energy futures finished mostly lower. Benchmark U.S. crude oil slid 1.6 
percent to settle at $59.04 a barrel. Brent crude fell 1.2 percent to close at 
$67.03 a barrel.

   Wholesale gasoline added 0.3 percent to $1.32 a gallon, heating oil dropped 
1.1 percent to $1.97 a gallon and natural gas fell 2.4 percent to $2.75 per 
1,000 cubic feet.

   Gold gained 0.4 percent to $1,312.30 an ounce, silver lost 0.2 percent to 
$15.41 an ounce and copper gave up 2.2 percent to $2.84 a pound.

   The dollar fell to 110.07 yen from 110.79 Japanese yen on Thursday. The euro 
weakened to $1.1294 from $1.1354. 


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