Global stocks fell Tuesday on economic news from Europe and Syria. The disappointing news about Europe’s economy also weighed down Wall Street. The Dow Jones industrial average opened lower and finished the day with its second triple-digit loss in a row.
NEW YORK (AP) — Grim economic news from Europe and airstrikes in Syria rattled global stocks Tuesday.
Most of the damage was felt in European markets, which fell sharply after a closely watched gauge of business activity for the region fell to a nine-month low.
The disappointing news about Europe’s economy also weighed down Wall Street. The Dow Jones industrial average opened lower and finished the day with its second triple-digit loss in a row.
Investors have been dealing with meager economic growth in Europe for months. The eurozone economy has been flat or barely growing since April, hobbled by the lingering effects of a debt crisis, uncertainty over a conflict in Ukraine and a lack of confidence among European consumers, businesses and banks.
“It has a very feeble recovery going on that is vulnerable to even the slightest external shock,” said Jacob Kirkegaard, senior fellow at the Peterson Institute for International Economics.
The European Central Bank has announced a series of measures to jolt the economy, cutting interest and pumping money into the financial system by buying bonds backed by assets such as auto and credit-card loans. But it has yet to go as far as the U.S. Federal Reserve did, buying government bonds in an effort to push long-term interest rates lower.
Carl Weinberg, chief economist at High Frequency Economics, is not optimistic: “Recovery will take years.”
European market indexes sank after the economic news. Germany’s DAX fell 1.6 percent, France’s CAC 40 fell 1.9 percent and the U.K.’s FTSE 100 lost 1 percent.
In U.S., the Dow slid 116.81 points, or 0.7 percent, to 17,055.87. The S&P 500 index lost 11.52 points, or 0.6 percent, to 1,982.77 and the Nasdaq composite fell 19 points, or 0.4 percent, to 4,508.69.
The Dow’s triple-digit fall on Tuesday follows a 107-point stumble from the day before. The blue-chip index hasn’t posted two losses of 100 or more points since June.
Still, the outlook in the U.S. is far more positive than Europe. The economy has been gaining strength after getting off to a slow start this year. Growth reached a 4.2 percent annual pace from April through June. Unemployment has dropped to 6.1 percent in August from 7.2 percent a year earlier. Employers have been adding 215,000 jobs a month this year, up from 194,000 a month in 2013. Consumers are more confident and willing to take on debt.
But individual countries’ economies cannot stand on their own in today’s global economy. If Europe and Asian economies were to lose more traction, it could spill over into the U.S., traders say. Companies in the Standard & Poor’s 500 index, for example, generate nearly half their sales abroad.
“When it comes right down to it, U.S. companies do business globally,” said Quincy Krosby, a market strategist with Prudential Financial. “Unless global demand can keep up, it’s going to start hurting these companies.”
Along with the bad economic news, investors had geopolitical concerns to worry about Tuesday.
The U.S. and five Arab nations attacked the Islamic State group’s headquarters in eastern Syria in nighttime raids Tuesday. U.S. aircraft as well as Tomahawk cruise missiles launched from Navy ships in the Red Sea and the northern Persian Gulf were used.
“The escalation of the conflict will of course raise questions over the risk appetite of many within the markets,” said Joshua Mahoney, research analyst at Alpari.
Investors moved money into U.S Treasury bonds and gold, which are considered havens during times of trouble. The yield on the 10-year U.S. Treasury note fell to 2.53 percent from 2.57 percent. The price of gold rose $4.10, or 0.3 percent, to $1,222 an ounce.
“Bonds and gold are responding to those geopolitical concerns,” Krosby said.
In other metals trading, silver edged up half a penny to $17.78 an ounce. Copper fell less than a penny to $3.04 a pound.
U.S. health care stocks were among the hardest hit after the Obama Administration announced rules that would go after companies trying to do so-called corporate inversion deals. Such deals happen when a company merges with an overseas competitor to legally move its headquarters out of the U.S. to avoid paying high corporate tax rates. Health care companies have been among the most active in striking such deals.
Shares fell for Medtronic and AbbVie, which have considered inversion deals. Medtronic lost $1.90, or 3 percent, to $64.08 and AbbVie fell $1.15, or 2 percent, to $57.56. AstraZeneca, which was approached by Pfizer earlier this year to do an inversion deal, fell $3.54, or 5 percent, to $71.13.
The euro was flat at $1.286 while the dollar rose 0.1 percent to 108.86 yen.
In oil markets, U.S. crude oil rose 69 cents to close at $91.56 a barrel in New York. Brent crude, a benchmark for international oils used by many U.S. refineries, fell 12 cents to close at $96.85 on the ICE Futures exchange in London, reaching its lowest level since June of 2012.
In Asia, the decline in stocks was more modest. Hong Kong’s Hang Seng shed 0.3 percent and Seoul’s Kospi fell 0.6 percent. The Shanghai Composite Index gained a 0.2 percent.
Economics Writer Paul Wiseman contributed to this report from Washington.