Investors' rising fears over reluctant consumer spending helped take a chunk out of world stock prices Monday.
Share prices slipped and demand for government debt soared. The Dow Jones industrial average fell sharply, dropping 186 points — or 2 percent — to 9,135. Overseas, the Shanghai stock market fell almost 6 percent, and major indexes in Europe lost an average of 1.9 percent.
China's main market fell 5.8 percent as investors worried that the government would tighten bank lending policies. Falling profits at home improvement chain Lowe's Cos. also worried investors.
Other U.S. indicators fared slightly worse than the Dow, losing between 2 and 3 percent of their overall value. The Standard & Poor's 500 index fell 24 to 980. The Nasdaq composite index was down 55 at 1,931.
About 2,700 stocks fell and fewer than 350 stocks rose on the New York Stock Exchange. Volume was 1.2 billion shares.
The global sell-off, across all industries, was prompted by Friday's disappointing data on consumer confidence and a recent spate of lackluster earnings reports. Investors sought a safe haven in Treasury bonds.
Analysts fear that despite improvements in the housing and manufacturing sectors, consumer spending — which accounts for two-thirds of all U.S. economic activity — will continue to falter amid tight credit and job losses.
Those fears seemed to be reinforced by poor earnings from home improvement retailer Lowe's Cos., which reported a 19 percent fall in second-quarter profits. The Lowe's profit report comes after last week's results from the nation's largest retailer, Wal-Mart Stores Inc., which also fell during the April-June period.
The retreat follows a nearly 50 percent run-up in U.S. stock prices that began in March.
Joe Saluzzi, co-head of equity trading at Themis Trading LLC, said the market had risen too far and that "the economics obviously don't support where we've been."
In Europe, the FTSE 100 index of leading British shares closed down 68.96 points, or 1.5 percent, at 4,645.01; while Germany's DAX fell 107.5 points, or 2 percent, to 5,201.61. The CAC-40 in France was 75.58 points, or 2.2 percent lower, at 3,419.69.
Investors weren't satisfied by news that Japan had emerged from recession in the second quarter. Reports of a 6.3 percent uptick in Japanese exports,
as well as government stimulus measures, disappointed traders who were anticipating an even stronger performance.
Japan's Nikkei 225 stock average dropped 3.1 percent, to 10,268.61.
Markets in China, whose export-led economy is dependent on consumers in the U.S. and elsewhere, took a nose dive. Shanghai's benchmark tumbled 5.8 percent, to 2,870.63, while Hong Kong's Hang Seng dived 3.6 percent, to 20,137.65.
South Korea's Kospi dropped 2.8 percent, and India's Sensex was down 3 percent. Markets in Taiwan, Australia and Singapore gave back more than 1 percent.
From NPR and wire reports
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