NEW YORK |
NEW YORK (Reuters) – The Dow and the SP 500 fell for a third straight day on Thursday on concerns about the global economy’s growth outlook after manufacturing data showed a drop in new orders in both the euro zone and China.
The market has shown resilience recently, able to rebound off sluggish starts to the session, but Thursday’s trading could represent the first significant test of whether the SP 500 can hold the 1,400 support level.
China’s manufacturing sector activity shrank in March for a fifth successive month, and in Europe, manufacturing in the euro zone contracted further, led by a decline in French and German factory activity, data showed.
Shares of FedEx Corp, the world’s No. 2 package delivery company, slumped on Thursday, dragging down the Dow Jones Transportation Average after the company warned of a lowered outlook due to Europe’s weak economy.
“The thought that the global economy might be entering a recession is what’s causing investors to take a pause from the rally,” said Jack DeGan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire.
“But I see this as no more than a short-term consolidation. We broke above the 1,230-1,360 range that we had been trading for over a year. As long as we don’t enter that range again, I think the decline we are seeing is short-term.”
Thursday’s data greatly reduced hopes that the euro zone could sidestep a recession, and indicated China’s slowdown has yet to wane.
The Dow Jones industrial average .DJI was down 69.51 points, or 0.53 percent, at 13,055.11. The Standard Poor’s 500 Index .SPX was down 8.98 points, or 0.64 percent, at 1,393.91. The Nasdaq Composite Index .IXIC was down 8.93 points, or 0.29 percent, at 3,066.39.
FedEx Corp (FDX.N) shares fell 4.3 percent to $91.70. The Dow Jones Transportation Average .DJT lost 1.8 percent.
European equity markets weakened for a fourth straight session, heading for their longest down run in four months..EU
Evidence of an improving U.S. job market failed to lift sentiment. The U.S. Labor Department reported new claims for unemployment benefits fell last week to 348,000, the lowest level in four years.
In contrast to the overall market’s declines, Dollar General Corp (DG.N) advanced 3.6 percent to $46.37 after reporting higher-than-expected earnings and sales for the holiday quarter. [ID:nL1E8EM1J5] The stock of the discount retailer, which prices most of its merchandise below $10, earlier hit a 52-week high at $46.95.
But McDonald’s Corp’s (MCD.N), a Dow component, fell 0.6 percent to $96.14 a day after the world’s biggest hamburger chain said Chief Executive Jim Skinner is retiring after more than seven years at the helm.
(Editing by Jan Paschal)