NEW YORK — Stocks tumbled again on Wednesday as worries about a weakening global economy boomeranged around the world.
For a second straight day, the S&P 500 dropped to its worst loss in five weeks. The latest wave of selling came after a report showed hiring by U.S. companies slowed more than economists expected last month, with mining and manufacturing particularly weak. It added to worries that shook markets a day earlier, when a reading on U.S. manufacturing growth dropped to its worst level in a decade.
The reports underscored that President Donald Trump’s trade war with China is continuing to drag on exports and raised the worry that the weakness could spill over into other areas of the economy. It sent markets around the world reeling, with losses sweeping from the United States on Tuesday into Asia and through Europe on Wednesday.
The S&P 500 lost 52.64 points, or 1.8%, to 2,887.61. It was the first back-to-back loss for the index of more than 1% since late last year, when fears about a possible recession seized markets. The Dow Jones Industrial Average fell 494.42, or 1.9%, to 26,078.62, and the Nasdaq composite dropped 123.44, or 1.6%, to 7,785.25.
Adding to the market’s uncertainty was a ruling by the World Trade Organization that cleared the United States to impose tariffs on up to $7.5 billion of goods from the European Union to make up for illegal subsidies given to plane-maker Airbus.
Even investors who are optimistic that the U.S. economy isn’t facing an imminent recession were struck by Tuesday’s surprisingly weak manufacturing report.
“Manufacturing, that data point does give me further pause,” said Adrian Helfert, director of multi-asset portfolios at Westwood.
The weakness means an even brighter spotlight on the federal government’s more comprehensive report on the jobs market, which is scheduled for Friday. It measures hiring across the economy, and economists expect it to show an acceleration in hiring last month.
“We still are a consumption-led economy,” Helfert said. “I’m watching that very closely. I am looking for that virtuous cycle.”
If hiring remains strong, it would support what’s been the stalwart of the economy despite the trade war: healthy consumer spending. If households continue to spend, it can lead to a cycle where stronger sales for companies push them to invest more in their businesses, which creates more jobs and leads to even more consumer spending.
Another report that could move markets is Thursday’s reading on the U.S. service sector. Further down the calendar, U.S. and Chinese envoys are expected to discuss their trade disputes next week, and markets have been quick to move on any hint of the chances of a possible deal between the world’s largest economies.
But the weaker-than-expected reports so far this week have rattled investors.