China Manufacturing Weighs on Markets

China Manufacturing Weighs on Markets

NEW YORK (AP) -- More weakness in Chinese manufacturing weighed on U.S. and European financial markets on Tuesday, renewing concerns that the world's second-largest economy is slowing down. Those fears were compounded after European officials cut back their growth forecasts for that region's struggling economy.

KEEPING SCORE: The Dow Jones industrial average lost 187 points, or 1.1 percent, to 17,706 as of 12:10 p.m. Eastern. The Standard & Poor's 500 index lost 22 points, or 1.1 percent, to 2,059 and the Nasdaq composite fell 58 points, or 1.2 percent, to 4,760.

CHINA WORRIES: The Caixin magazine's purchasing managers' index for China's manufacturing sector declined to 49.4 last month from 49.7 in March. A number below 50 indicates that manufacturing is contracting. Worries about China were largely responsible for turmoil in global financial markets in the early part of the year.

WEAKNESS IN EUROPE: European officials trimmed their economic growth forecasts for the 19 countries that share the euro currency, citing an unpredictable global outlook marked by political uncertainty and weakness in emerging markets.

Although Europe's economy was surprisingly strong in the first quarter, when it regained the size it was before the 2008 financial crisis, EU Commissioner Pierre Moscovici said the recovery "remains uneven."

AUSTRALIA WORRIES: Adding to the worries about China and Europe, Australia's central bank unexpectedly cut interest rates to a record low. Australia's economy has been battered as commodity prices have plummeted and other parts of the developed world have slowed down. The news sent the Australian dollar down more than 2 percent.

PULLED DEPOSITS: The global economic worries caused more losses for two of the hardest-hit sectors in the U.S. stock market this year: energy and banks. Energy companies in the S&P 500 slumped 2.6 percent, the most in the index, and financial stocks were close behind with a drop of 2.1 percent.

Chevron dropped $2.15, or 2.1 percent, to $101.16. JPMorgan Chase lost $1.71, or 2.7 percent, to $62.07, the biggest loss in the Dow Jones industrial average. Goldman Sachs fell $3.45, or 2.1 percent, to $162.73.

BLUE PILL: Pfizer jumped 94 cents, or 3 percent, to $33.74 after the company reported solid first quarter earnings that beat analysts' estimates. Pfizer saw big sales gains in some of its newest drugs, including Lyrica and vaccine Prevnar 13.

ENERGY: Benchmark U.S. crude oil lost $1.12 to $43.66 a barrel on the New York Mercantile Exchange. Brent crude, the international standard, fell 90 cents to $44.92 a barrel in London.

BONDS, CURRENCIES: U.S. government bond prices rose sharply. The yield on the 10-year Treasury note fell to 1.79 percent from 1.87 percent late Monday. The euro fell to $1.1509 from $1.1523. The dollar fell to 106.31 yen from 106.45 yen.

(KA)