Oil slide, China worries send Wall Street tumbling

Wall Street’s three major stock indexes lost ground on Friday, after a week of recovery from the October sell-off, as oil prices fell further and more evidence of a slowing Chinese economy was reported.

Oil prices fell nearly 1.0% on Friday, and have now seen the longest stretch of daily declines since 1984, on rising global supply and evidence of a slowing world economy.

The United States formally imposed punitive sanctions on Iran this week, but granted eight countries temporary waivers allowing them to keep buying oil from the Islamic Republic.

“Oil is spooking the market. If oil prices are going to go lower that’s another sign that the global economy is going to slow its growth,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.

The Dow Jones Industrial Average fell 201.92 points, or 0.77%, to 25 989.3, the S&P 500 lost 25.82 points, or 0.92%, to 2 781.01 and the Nasdaq Composite dropped 123.98 points, or 1.65%, to 7 406.90.

The S&P energy index dropped 0.4% after falling 2.2% in the previous day’s session when US crude prices confirmed a bear market by falling 20% from their most recent high.

“I think we’re going to go lower than the October low. Economic growth is slowing but it won’t slow enough to stop the Fed from hiking,” said Jim Paulsen, chief investment strategist at the Leuthold Group in Minneapolis.

Investors appeared unwilling to take on risk, sending the S&P technology index down 1.7% as Apple Inc dropped 1.9% and semiconductor stocks tumbled 1.9%.

Eight of the 11 major S&P sectors ended the day lower.

The consumer staples index was the biggest gainer with a 0.5% rise while other defensive sectors such as utilities and real estate eked out small gains.

Against the backdrop of the trade policy dispute between the Washington and Beijing, Chinese data showed producer inflation fell for the fourth straight month in October on cooling domestic demand and manufacturing activity, while car sales fell for a fourth consecutive month.

The Chinese data sent global stocks into a tailspin and put pressure on trade and commodity sensitive sectors. The US industrials sector fell 1.0% and materials dropped more than 1.4%.

US Federal Reserve policymakers left interest rates unchanged on Thursday, as expected and its policy statement signaled more rate rises ahead even as it noted that business investment had moderated.

The latest data on US producer price inflation did little to ease worries about rising interest rates which have hampered gains in stocks this year.

Shares in tobacco companies fell after an official said that the US Food and Drug Administration would issue a ban on the sale of fruit and candy flavored electronic cigarettes in convenience stores and gas stations.

Altria Group ended 2.98% lower while British American Tobacco’s US shared fell 4.2%.

Declining issues outnumbered advancing ones on the NYSE by a 2.22-to-1 ratio; on Nasdaq, a 2.95-to-1 ratio favored decliners.

The benchmark S&P 500 index posted 29 new 52-week highs and 8 new lows; the Nasdaq Composite recorded 46 new highs and 113 new lows.

On US exchanges 7.93 billion shares changed hands compared with the 8.39 billion average from the last 20 sessions.