Dow Falls 91, Nasdaq Finishes Down 37

NEW YORK (AP) — Stocks and commodities took a nosedive Friday on worries that China might put the brakes on its surging economy.

Any slowdown in the Chinese economy will likely reduce global demand for oil, metals and grains, which sent prices of those commodities lower.

The Dow Jones industrial average fell 90.52, or 0.80 to 11,192.58, led by sharp losses in energy and materials stocks. Construction giant Caterpillar Inc., which has huge operations in China, fell 1.40 percent to $81.04 and oil company ExxonMobil Corp. fell 0.84 percent to $70.99.

The Standard & Poor’s 500 index fell 14.43, or 1.2 percent, to 1,199.21, while the Nasdaq composite index fell 37.31, or 1.5 percent, to 2,518.21. Freeport-McMoRan Copper & Gold Inc. fell 3.8 percent to $104.92.

The Chinese government said that the pace of inflation hit a more than two-year high in October. That sent Chinese markets sharply lower in overnight trading before the sell-off hit stocks and commodities in the U.S. Friday on worries that China would hike rates to tamp down inflation.

The Shanghai composite index plummeted 5.2 percent Friday, while Hong Kong’s Hang Seng tumbled 1.9 percent.

Worries of slowing Chinese demand led to “mass liquidation” in the commodities market, said John Sanow, an analyst with Telvent DTN in Omaha, Neb.

Gold fell $37.80, or 2.7 percent, to $1,365.50 an ounce. Crude oil fell $2.93, or 3.3 percent, to $84.88 a barrel, while soybeans plummeted 70 cents, or 5.2 percent, to $12.69 a bushel.

Cooling down China’s growth could have an impact worldwide because the country’s robust economy has helped offset sluggishness in places like the U.S. Many companies have credited international sales, particularly in China, as a reason earnings have been strong.

The speculation about a rate hike in China came as little headway was made on a plan to strengthen global growth. Leaders from the Group of 20, which includes large developed and emerging economies, failed to agree on policies about trade and currency manipulation that could stoke protectionism and a trade war.

“The G-20 wasn’t much of a success for the U.S.,” said Kim Caughey Forrest, equity research analyst at Fort Pitt Capital Group. “There’s a sense that nobody really has the ideas on how to get us out of here.”

Other nations refused to endorse a plan the U.S. presented to force China to allow the value of its currency to rise. The U.S. argues that China is keeping the value of its currency artificially low because a weak currency makes exports cheaper and more attractive globally. That, in turn, gives China an unfair advantage in global markets, helping its economy at the expense of others.

The dollar resumed its slide against other major currencies. It had rallied in recent days, particularly against the euro, as Ireland’s debt crunch renewed worries about the European financial system. A fiscal crisis in Greece this spring helped bring down stocks around the world, and investors are hoping Ireland can right its own finances without having to seek a bailout as Greece did.

Bond prices fell, sending interest rates higher. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.78 percent from 2.65 percent the previous day.

Intel Corp. was among the few gainers, rising 1.51 percent to $21.53 after the chip maker said it will raise its dividend 15 percent.