NEW YORK (AP) — Fear is back in the market. Investors are fretting about China’s growth, a plunge in Argentina’s peso and the profit outlook for U.S. companies.
Those worries converged to set off a two-day rout in global markets, and sent the Dow Jones industrial average down more than 318 points Friday, its biggest daily point decline since June 20, 2013.
Investors are dumping risky assets such as stocks and currencies in countries with troubled governments. They are buying safer ones like bonds and the Japanese yen
The downturn began Thursday following signs manufacturing was contracting in China, a major importer of raw materials and a key driver of global economic growth. The values of currencies in several emerging markets dropped. Those markets include Turkey, Russia, South Africa and Argentina.
“All of that is making the market very sensitive and very vulnerable to growth expectations in emerging markets,” said with Anastasia Amoroso, global market strategist at J.P. Morgan Funds.
The Dow has fallen every day this week. That decline is the Dow’s worst weekly performance since mid-May 2012. Meanwhile, the S&P 500 is down 2.2 percent since last Friday. That’s the index’s worst weekly slide since November 2012.
In another sign investors are avoiding risk, stocks of smaller companies had even larger declines than the broader U.S. market. The Russell 2000 index of small-company stocks fell 2.6 percent, compared with the Dow’s decline of 1.6 percent.