World equity benchmarks hit their lowest levels in a month as signs of a slowdown in U.S. economic growth and weak earnings in Europe fanned fears that the U.S.-China trade war could push the global economy into a recession.
In the United States, the ADP National Employment report showed private payroll growth was lower than expected in September, adding to concerns about softening economic growth.
Global stock benchmarks tumbled Tuesday after a measure of U.S. manufacturing fell to its lowest level in more than 10 years, removing one of few remaining bright spots in the global economy just as Europe is seen as close to falling into recession.
“The weakening conditions in Europe and the slowdown in China, it’s all adding up to the same thing essentially: worries that the global economy is slowing and giving investors reason to pause and take profits,” said Robert Pavlik, chief investment strategist manager at SlateStone Wealth LLC in New York.
MSCI’s gauge of stocks across the globe shed 1.60%, following broad declines in Europe that pushed benchmark indices to their lowest levels in a month. The FTSE 100 index slipped 2%, the largest drop across European regions.
On Wall Street, the Dow Jones Industrial Average fell 494.42 points, or 1.86%, to 26,078.62, the S&P 500 lost 52.64 points, or 1.79%, to 2,887.61 and the Nasdaq Composite dropped 123.44 points, or 1.56%, to 7,785.25.
Selling was triggered after the Institute for Supply Management’s (ISM) index of factory activity, one of the most closely watched data on U.S. manufacturing, dropped to the lowest level since June 2009.
Markets had been expecting the index to rise back above the 50.0 mark denoting growth but the index dropped 1.3 points to a reading of 47.8 last month.