US stocks closed their worst two-week slide since November with a selloff on Friday as disappointing China growth data sparked worries the global recovery was flagging.
Concerns that Europe's debt crisis was flaring up again added to selling pressure. Sectors taking the hardest hit were those most closely linked to growth, including materials, energy and financials. The S&P 500 is now down 3.4 per cent from this year's closing high, after falling 2.7 per cent over the past two weeks.
What you need to know
- AUD lower on China GDP data
- ASX burns bright by week's end
- Euro stocks dip on China weakness
- Gold falls most in a week
- Oil caps fifth weekly loss since February
- Australian business calendar: April 16-20
- Wall Street week ahead: Stocks to track earnings
Australian shares are expected to open lower when trade resumes on Monday following losses on offshore markets. On the ASX24, the SPI futures was 31 points lower to 4300.
The Australian dollar fell back from a 10-day high on weaker than expected Chinese economic growth data. At 5pm yesterday, the Aussie was trading at $US1.0385, down from an intraday high of close to $US1.045, and $US1.0391 cents a day earlier.
"Everyone is looking for global growth, but the slowing in China and the rising yields in Europe are creating questions about how strong we might expect it to be," said Brad Sorensen, director of market and sector analysis at Charles Schwab in Denver. "That's leading to a correction here, with financials especially taking a hit."
The S&P financial sector index fell 2.5 per cent in Friday's session and lost 2.8 per cent for the week. Bank of America Corp dropped 5.3 per cent to $US8.68. Morgan Stanley slumped 5.2 per cent to $US17.28.
The cost of insuring Spanish debt against default hit 500 basis points for the first time on fears about the high exposure of the country's banking sector to sovereign debt.
Data showed that China's economy expanded 8.1 per cent in the first quarter, a rate that was slower than expected and the country's weakest pace in nearly three years.
The Dow Jones industrial average tumbled 136.99 points, or 1.05 per cent, to 12,849.59 at the close. The Standard & Poor's 500 Index slid 17.31 points, or 1.25 per cent, to 1,370.26. The Nasdaq Composite Index dropped 44.22 points, or 1.45 per cent, to 3,011.33.
The S&P 500 is still up 9 per cent so far in 2012, but fell 2 per cent over the week. The Dow lost 1.6 per cent for the week and the Nasdaq dropped 2.2 per cent.
This week's losses came on top of the slide in the previous week, which was cut short a day for the Good Friday holiday. In that week, the Dow dropped 1.1 per cent, while the S&P 500 slipped 0.7 per cent and the Nasdaq shed 0.4 per cent.
For both the Dow industrials and the benchmark S&P 500, this was the worst two-week per centage drop since late November.
Weighing on the Nasdaq, Apple Inc dropped 2.8 per cent to $US605.23.
In the previous two sessions of back-to-back gains, the S&P 500 had added 2.1 per cent as immediate concerns about rising yields in Spain and Italy ebbed and on bets that the Chinese GDP data would surprise on the upside.
Banks fell in Friday's session despite earnings from JPMorgan Chase & Co and Wells Fargo & Co that beat Wall Street's expectations. JPMorgan lost 3.6 per cent to $US43.21. Wells Fargo fell 3.5 per cent to $US32.84.
Google Inc slid 4.1 per cent to $US624.60 a day after reporting a second straight slip in search advertising rates, though it also posted a first-quarter profit that beat expectations.
With 6 per cent of the S&P 500 components having reported results, three-fourths of companies have reported profits that topped expectations.
"So far, so good with earnings, but expectations have been low, and it's far too early to tell what the season will be like as a whole," said David Kelly, chief market strategist for JPMorgan Funds in New York. "It's understandable people want to take profits right now, especially given how much we're up this year."
Materials and energy shares dropped as copper and oil prices fell after the Chinese data. The S&P materials sector index shed 1.1 per cent and an S&P energy sector index lost 1.6 per cent.
Adding to concerns, two US reports on Friday sent mixed signals to the Federal Reserve about how much room there might be to bolster economic growth.
The US Consumer Price Index rose modestly in March among signs that a surge in gasoline costs was ebbing, but inflation still outpaced workers' earnings and threatened to undermine spending.
The Thomson Reuters/University of Michigan survey showed US consumer sentiment slipping modestly in early April as higher gasoline prices hit household budgets even as optimism about the economic outlook lifted consumers' expectations.
Almost three-fourths of stocks traded on both the New York Stock Exchange and Nasdaq closed lower. Volume was light, with about 6.07 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's daily average of 7.84 billion.