U.S. stocks closed lower Friday, with the Dow pressured by a plunge in the shares of Boeing and Johnson and Johnson, after a good start to the third quarter corporate earnings season, despite worries about global economic growth.
After a report that Boeing failed to turn over communications between its employees during the certification of the grounded 737 Max jet, Boeing /zigman2/quotes/208579720/composite BA -0.76% shares plunged, accounting for about 60 percent of the fall in the price-weighted Dow Jones Industrial Average, erasing its gains for the week.
How did the major indexes do?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.57% shed 255.68 points, or 0.95%, at 26,770.2, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX -0.30% lost 11.75 points or 0.39% at 2,986.2 and the Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.09% fell 67.31 points or 0.83% to 8,089.54. All told, stocks ended the week less than 3% from their record closes, according to Dow Jones Market Data.
Stocks ended with small gains Thursday, with the Dow up 23.9 points, or 0.1%, at 27,025.88 after flipping between positive and negative territory. The S&P 500 gained 8.26 points, or 0.3%, to close at 2,997.95, while the Nasdaq Composite advanced 32.67 points, or 0.4%, to finish at 8,156.85.
What drove the market?
Shares of Boeing Co. /zigman2/quotes/208579720/composite BA -0.76% fell to a two month low after a report said that internal messages suggest the company misled federal aviation authorities about the safety of the 737 Max jet.
The 737 Max jets have been grounded worldwide since March following two fatal crashes less than five months apart. Their return to service date, pending a fix Boeing has been working on for months, keeps being pushed back. The jets are expected to return to the skies by early 2020.
Johnson & Johnson /zigman2/quotes/201724570/composite JNJ +1.13% fell sharply after the consumer products and drug company said it was recalling “a single lot” of Johnson’s Baby Powder after tests revealed traces of chrysotile asbestos.
However, to date, 15% of S&P 500 index companies have reported actual results for third quarter and 84% have reported earnings per share is above forecasts while 64% have reported sales above estimates, according to Factset, despite ongoing concerns about global economic growth.
China reported growth of the world’s second-largest economy slowed to 6% in the third quarter from a 6.2% pace in the second quarter, and the slowest pace since the early 1990s, as business investment weakened.
“Friday’s data shows that the decline is accelerating and that trade-war frictions are taking their toll faster than expected,” said Fiona Cincotta, senior market analyst at City Index, in a note.
In U.S economic data, the Conference Board’s index of leading indicators fell for a second month, suggesting the economy grew more slowly in September.
“It is the China thing, but with the start of the earnings season, you always get the good numbers first,” said Maris Ogg, president of Tower Bridge Advisors, in an interview with MarketWatch. “For banks, it’s been a mixed-picture on loan growth,” she said. “We are going to be on the edge of our seats” while wait to hear what more earnings reveal about the health of the U.S. consumer.