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US stock indexes drop as economic, earnings worries rise

Specialist Glenn Carell, center, and trader John Panin work on the floor of the New York Stock Exchange on Thursday, as renewed pessimism about the strength of the global economy and corporate profits this year led to sharp losses on Wall Street.

(AP) — Renewed pessimism about the strength of the global economy and corporate profits this year led to sharp losses Thursday on Wall Street.

Technology companies, health care stocks and banks accounted for much of the selling. Twitter slumped almost 10 percent after issuing a weak forecast. Traders sought safety in U.S. government bonds, sending yields on the 10-year Treasury note down to 2.66 percent from 2.69 percent late Wednesday. That drop weighed on bank shares; Wells Fargo fell 2.3 percent.

The broad sell-off followed a slide in overseas markets after European officials slashed their forecast for economic growth this year in the 19 countries that use the euro and the Bank of England warned that the British economy is set for its weakest growth in a decade.

The moves are the latest flashpoints of worry as investors gird for predicted slowdowns in economies around the world and weaker corporate earnings growth.

Stocks bounced back this year after a dismal December, riding a wave of positive momentum after the Federal Reserve signaled that it would take a more patient approach to raising interest rates. Corporate earnings, which have mostly come in ahead of lowered expectations, also helped lift the market this month, carrying the Standard & Poor’s 500 to a five-day winning streak that ended Wednesday.

“We’ve come so far so fast that people were just looking for a chance to be able to say, ‘Yeah, that’s it, I’m going to take some money off the table,’ ” said Tom Martin of Globalt Investments.

The S&P 500 fell 25.56 points, or 0.9 percent, to 2,706.05. The Dow Jones industrial average lost 220.77 points, or 0.9 percent, to 25,169.53. The Nasdaq composite slid 86.93 points, or 1.2 percent, to 7,288.35. The Russell 2000 index of smaller companies gave up 12.40 points, or 0.8 percent, to 1,505.63.

U.S. indexes took their cue early Thursday from major European markets, which tumbled after the European Union’s commission slashed its 2019 forecast for economic growth in the 19 countries that use the euro to 1.3 percent from an earlier forecast of 1.9 percent.

In London, the Bank of England cut its forecast for the British economy’s growth this year to 1.2 percent from an earlier forecast of 1.7 percent. That would be its slowest growth since 2009.

In the U.S., a report showed that the job market remains strong as fewer Americans applied for unemployment benefits last week, a sign that layoffs are low. But many economists expect the U.S. economy to slow this year as well.

The discouraging economic forecasts coupled with some companies lowering their 2019 earnings estimates stoked jitters across the market.

Twitter’s latest financial report fed traders’ concerns about slowing corporate profits. Its stock price fell 9.8 percent after it said revenue for the current quarter may fall short of estimates.

Benchmark U.S. crude oil dropped 2.5 percent to $52.64 a barrel. That helped drag energy stocks in the S&P 500 down Thursday by 2.1 percent, the worst decline among the 11 sectors that make up the index.

Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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