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Dow drops more than 350 points at start of the new year on fears of global slowdown

A Wall Street sign in New York on May 25, 2018. MUST CREDIT: Bloomberg photo by Michael Nagle.

Global markets retreated Wednesday and volatility resumed in 2019 amid worries over a slowing world economy.

The Dow Jones industrial average fell more than 350 points at the open as new data on Chinese manufacturing showed a slowdown in the world's second biggest economy.

The S&P 500 and Nasdaq composite index also opened downward, as the turbulence that rattled the U.S. stock market in 2018 carried into the new year.

Asian markets were hit hard in overnight trading, with the Hang Seng Index down 2.77 percent, the Shanghai composite dropping 1.15 percent and Japan's Nikkei 225 losing 0.31 percent.

The European Soxx600 was down 0.8 percent and the French CAC 40 fell 1.5 percent. Britain's FTSE 100 was down about 0.77 percent.

"You can blame the whole thing on the weakness of China," said Kenny Polcari of Butcher Joseph Asset Management. "China came out with a weak manufacturing number. This is going to force the Trump administration to the realization that they need to make a trade deal sooner rather than later. If the data is weak now, it's only going to get worse as the negotiations drag on."

Wednesday's losses followed a down 2018 for stocks, the worst in a decade. All three major indexes finished 2018 in the red after a tumultuous year.

The Dow Jones industrial average finished 5.6 percent down and the S&P 500 finished 6.2 percent down for 2018. The tech-heavy Nasdaq composite finished the year at a 3.9 percent loss.

Wednesday's global pullback came after a private sector survey indicated that China's manufacturing was contracting for the first time in 19 months. The private report follows release of official data last week that reflected weakness in the Chinese factory sector.

"The global equity markets need a strong Chinese economy, and it's faltering," said John Kilduff of Again Capital. "That is weighing heavily on oil and will continue to weigh on stocks into the new year."


This article was written by Thomas Heath, a reporter for The Washington Post.