The major stock indexes closed lower on Wall Street Friday, giving up early gains and as investors warned that weaker-than-expected economic data in China could hamper the fourth-quarter earnings season.
The Dow Jones Industrial Average slipped by 150 points after morning trading, ending the day up just about 100 points, at 25,405. The broader S&P 500 fell 0.8 percent, ending at 2,713. The Nasdaq Composite sank 0.4 percent to 6,907.
Major stock indexes got a boost from upbeat economic reports Thursday but many investors said the data wasn’t strong enough to boost the market past Wall Street’s lofty highs.
“The market and economy have been boosted on the premise that we have led the G-7 and that wage growth will continue to be very, very positive,” said JJ Kinahan, chief market strategist at TD Ameritrade. “But the reality is GDP has been incredibly underwhelming for a long time.”
Some of the market’s bright spots were thinned. The dollar eased by 0.9 percent against a basket of major currencies, led by a slump in shares of McDonald’s Corp. The dollar index is down more than 2 percent for the week, its steepest weekly drop since June.
“There has been a weak market consensus for a while,” said Jim Paulsen, chief investment strategist at Leuthold Group in Minneapolis. “And there is still a lot of uncertainty out there in terms of whether the Fed is really on hold or is they really going to raise [interest rates] again.”
McDonald’s was the biggest stock decliner on the Dow after the company said its sales rose in November, but U.S. sales stalled, joining a string of global food companies that are posting lackluster sales, due to fallout from several food scares. Shares of the company fell 3.8 percent.
“McDonald’s has a lot of very strong brands, but maybe it’s time to give the franchisees a break,” Kinahan said.
Analysts say the company has performed well despite rising interest rates, as McDonald’s has often sold its own home-brewed coffee to grocery stores and is known for its McCafe offerings and quick service.
Meanwhile, Boeing, General Electric and Caterpillar were all hit by lower metal prices on fears that weaker demand in China would weigh on the country’s economic growth.
The news on China, particularly, weighed on stocks. The weak Chinese data was the latest sign that the outlook for the world’s second-largest economy is growing more uncertain as President Xi Jinping weighs further stimulus and as trade negotiations continue.
China’s economy grew 6.6 percent in the third quarter of 2018, the slowest pace since the end of 2016.
“We’re seeing weakness across sectors,” Ryan Detrick, senior market strategist at LPL Financial, said of the market’s gyrations.
Analysts also said crude oil prices briefly nudged higher Friday. Worries about tensions between the United States and Iran contributed to oil’s post-election drop.
Oil prices have been pummeled by worries that a tough US embargo on oil exports from Iran could hurt global oil supplies next year. The White House has threatened to reimpose sanctions on Iran if it fails to make a deal with world powers to restrain its nuclear program.
On Thursday, talks between Washington and Iran’s negotiating team ended after the United States rejected Iranian President Hassan Rouhani’s demand for a release of Americans in Tehran prisons.
Talks between Iran and the major powers on December 5 in Vienna collapsed before making much progress, leaving little time for a resolution of the nuclear program issue by February’s deadline.
Another obstacle to an agreement is the Trump administration’s decision to reinstate sanctions on Iran.
While sanctions on oil imports by Iran start taking effect in early May, analysts said that companies with the biggest exposure to Iran’s oil exports would find it hard to continue buying oil from the country after the sanctions.
Benchmark Brent crude fell 1.5 percent on Friday, to $50.85, having eased 9.1 percent in the past two sessions.
On Wednesday, the International Energy Agency said global supplies have more than picked up the slack on Iran’s diminished exports. Brent is trading at about $85 a barrel.
The Wall Street Journal contributed to this report.