U.S. stocks are mixed Friday and indexes overseas are slightly lower as a steep plunge in global stock markets comes to at least a temporary halt.
Investors bought utilities, household-goods makers and other stocks they see as relatively safe, and Nike surged after a strong quarterly report. A key Federal Reserve leader reassured investors by saying the central bank is monitoring the economy and markets, and could change its course on interest rates if it has to.
Markets have suffered wide losses over the last week. The major U.S. indexes have fallen more than 10 percent this month, and without a substantial gain over the final days of trading, they are headed for their single-worst month since February 2009. That’s before the current bull market began.
Investors around the world have grown increasingly pessimistic about the global economy’s prospects over the next few years. It’s widely expected to slow down, but traders are concerned that the cooling might be worse than they previously believed and that the U.S. could eventually tip into a recession.
John Williams, the president of the New York branch of the Federal Reserve, said in an interview with CNBC that the Fed is aware the U.S. economy might weaken more significantly next year.
The Fed raised interest rates earlier this week and signaled that it expects to raise them two more times next year. Investors aren’t sure how much that will impair the economy, and the stock market tumbled as they worried the Fed just wasn’t concerned about that possibility.
“What I think the Fed is trying to do is soften the rhetoric a little bit by saying, ‘We’re going to be monitoring the economy and we acknowledge that things have eased a bit,'” said Sam Stovall, chief investment strategist for CFRA.
The Fed is projecting that the U.S. economy will grow 3 percent this year, the fastest since 2005, and about 2.3 percent next year, and forecasts two years of further increases after that. But as interest rates rise and regions the U.S. does a lot of business with, like Europe and China, also slow down, those estimates might be harder to reach.
Trade tensions between the U.S. and China, the largest and second-largest economies in the world, are not the only reason for the expected slowdown in economic growth and corporate profits, but they are adding even more uncertainty to a picture that already looks cloudy.
The S&P 500 index jumped as much as 1.5 percent following Williams’ comments, but the gains didn’t last. The index edged up 2 points, or 0.1 percent, to 2,469 at 11:39 a.m. Eastern time. The S&P 500, which is widely used by funds that track the U.S. market, has fallen about 16 percent from its high in September.
The Dow Jones Industrial Average rose 74 points, or 0.3 percent, to 22,934. The Nasdaq slipped 41 points, or 0.6 percent, to 6,486. The Russell 2000 index of smaller-company stocks lost 7 points, or 0.5 percent, to 1,318.
Athletic-gear maker Nike jumped 7.7 percent to $72.74 after a better-than-expected third-quarter report. That helped shoe retailer Foot Locker, which gained 4.2 percent to $49.91.
Household-goods companies climbed. Pepsi rose 2.1 percent to $112.57 and Procter & Gamble added 1.4 percent to $92.22. Also rising were utilities and health-care companies. Utility company Dominion Energy jumped 1.7 percent to $76.10 and drugmaker AbbVie surged 2.7 percent to 87.66.
As of Friday morning, utilities and health-care companies were the only two sectors in the S&P 500 that are higher than they were on Jan. 1. The S&P 500 itself is down about 8 percent in 2018. After accounting for dividends, it’s on track for its first annual loss since 2008, the year the global financial crisis roiled markets.
Defense contractors fell after President Donald Trump said he’s withdrawing U.S. soldiers from Syria in an unexpected move. Media reports say the administration might also pull large numbers of soldiers out of Afghanistan. Northrop Grumman fell 2.2 percent to $238.34 and Lockheed Martin fell 2.2 percent to $259.43.
The market’s big losses this month are an outlier because December is generally the strongest time of the year for U.S. stocks, as positions are closed out and people adjust their portfolios in anticipation of the year to come. Barring huge gains, this will be the worst December for the U.S. market since the 1930s.
Germany’s DAX slipped 0.2 percent while France’s CAC 40 fell 0.5 percent. The FTSE 100 in Britain dipped 0.5 percent. The Hang Seng index in Hong Kong rose 0.5 percent while South Korea’s Kospi inched up 0.1 percent. The Japanese Nikkei declined 1.1 percent.
All of those indexes have taken steep losses this year. The DAX, Hang Seng and Kospi have all plunged at least 20 percent since early January and the Nikkei is down 17 percent since early October.
Oil prices have declined 40 percent from recent highs amid concerns over a glut in the market and the slowing economy. Benchmark U.S. crude dipped 0.2 percent to $45.81 a barrel in New York. The international standard, Brent crude, declined 1 percent to $53.80 a barrel in London.
Bond prices were little changed. The yield on the 10-year Treasury note stayed at 2.79 percent.
The U.S. dollar also ticked higher after two days of sharp losses brought on by fears about the economy and slower increases in interest rates. The dollar edged down to 111.08 yen from 111.11 yen. The euro fell back to $1.1416 from $1.1469, and the British pound rose to $1.2672 from $1.2671.