by David Berman
Celebrating positive economic growth was so Thursday. On Friday, investors returned to worrying about the health of the U.S. economy, driving down major stock market indexes in a sharp and widespread selloff.
The Dow Jones industrial average closed at 9712.73, down 249.85 points, or 2.5 per cent. All 30 stocks in the index fell, led by a 7.3 per cent dip by Bank of America Corp. (BAC) and a 5.8 per cent decline by JPMorgan Chase & Co.(JPM).
Alcoa Inc. (AA), American Express Co. (AXP) and General Electric Co. (GE) fell by more than 4 per cent.
The broader S&P 500 closed at 1036.19, down 29.92 points, or 2.8 per cent. That marked the steepest one-day selloff since July 2. It also meant that the index fell 2 per cent in October, marking the first monthly decline since the stock market began to rebound in early March.
In Canada, the S&P/TSX composite index actually fared considerably better than the major U.S. indexes, despite a contraction in the country’s gross domestic product in August. The index closed at 10,910.75, down 164.47 points, or 1.5 per cent. However, this was no cause for celebration: The decline marked the fifth triple-digit loss in six trading sessions and put the index down 4.3 per cent for October.
There was no smoking gun on Friday, in the form of a devastating economics report or missed earnings. Rather, the decline appeared to reflect ongoing concerns about the ability of the U.S. economy to generate growth, as the government and central bank begin to withdraw various stimulus efforts.
In the United States, financials were the worst performers in October, falling 6 per cent. Materials fell 5.3 per cent and industrials fell 4.7 per cent. Energy stocks stood out in a good way, rising 3.2 per cent for the month. Consumer staples rose 1 per cent.
In Canada, all 10 subindexes in the S&P/TSX composite index were down in October. Information technology stocks were by far the worst hit, tumbling 9.6 per cent. Financials were the second-worst group, falling 7.7 per cent. By comparison, energy stocks did okay, falling 2 per cent. Telecom services performed the best, falling a mere 0.1 per cent.
Overseas on Friday, investors were in a similarly downbeat mood. In Europe, the U.K.’s FTSE 100 fell 1.8 per cent and Germany’s DAX index fell 3.1 per cent. Brazil’s Bovespa index fell 3.4 per cent, reflecting ongoing concerns about the valuations of many emerging markets.
In Japan, the Nikkei 25 rose 1.5 per cent in overnight trading – but that probably reflected Thursday’s euphoria rather than Friday’s gloom.
