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By Will Horner and Gunjan Banerji 

Fresh economic data and the viral outbreak in China fanned worries about global growth, weighing on stocks around the world to end the week.

The Dow Jones Industrial Average dropped 521 points, or 1.8%. The S&P 500 slipped 1.6% and the tech-heavy Nasdaq Composite fell 1.4%.

The World Health Organization on Thursday declared the coronavirus -- which has now sickened more than 9,500 people and killed over 200 -- a public-health emergency of international concern. Although the move highlighted the risk the outbreak posed globally, the WHO stopped short of recommending restrictions on travel or trade. Meanwhile, the U.S. saw its first person-to-person transmission of the virus, escalating concerns about its spread.

The growing contagion has roiled markets in recent days as investors attempt to assess whether the virus could weigh on China's economy as businesses are shut, borders closed and flights suspended, while also gauging the outbreak's wider impact.

"Everyone is a little bit in the dark," said Lars Kreckel, global equities strategist at Legal & General Investment Management. "But the conclusion for most is of a temporary hit to Chinese GDP -- and so, a bit of a hit to global GDP -- but not something that will derail global growth. A bump in the road."

The outbreak comes as some big manufacturers have exhibited signs of strain, raising concerns about the economy. Caterpillar, often considered a bellwether for the economy, said Friday it expects demand for its machinery to fall this year, citing global economic uncertainty that crimped sales in the latest quarter. Its shares dropped 1.9% Friday.

Boeing earlier this week reported its first annual loss in more than two decades, as one of its aircrafts has been grounded world-wide. 3M, meanwhile, is planning layoffs during a global restructuring.

One measure of business activity, the Chicago Business Barometer, fell to its lowest point in around four years, hitting 42.9 and falling well below expectations. Readings under 50 indicate activity is contracting.

"It's been a tale of two economies," said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

Though manufacturing data has disappointed, the consumer seems to be in better shape.

The University of Michigan's headline index of consumer sentiment hit an eight-month high.

Fresh data released Friday showed that U.S. consumers continued to spend in December, continuing a year-long trend. Household spending rose a seasonally adjusted 0.3% in December from November. Personal income advanced 0.2% last month. The spending figures were in line with economists' expectations, while the personal income number fell short of expectations.

The volatile week for stocks has been marked by even bigger moves in shares of individual companies, particularly some technology companies.

Amazon.com jumped 8.5% after the e-commerce giant's fourth-quarter sales set a record for the holiday period. It is poised to become the fourth U.S. company to close with a $1 trillion market value and close at a record.

Tesla's stock continued to soar after the electric-car maker reported its third consecutive quarter of record vehicle deliveries. Its shares jumped 10% Thursday though they edged lower Friday.

International Business Machines rose about 3.8% after the technology company said Chief Executive Ginni Rometty is stepping down following a challenging eight-year run.

"There was a belief going into earnings season that expectations of tech companies were so high that whatever happened, investors would be disappointed," said Mr. Kreckel. "That hasn't happened."

Elsewhere, the pan-continental Stoxx Europe 600 gauge fell 0.9% while stocks in Asia were mixed. The Hang Seng Index closed 0.5% lower, and exchanges in China remained shut.

New data on major European economies proved to be a disappointment on Friday. France's output shrank in the fourth quarter as strikes and protests against the government's pension plan curtailed business activity. Italy's economy also contracted in the latest quarter, when economists had been expecting output to remain flat. The euro area also grew more slowly than economists had forecast.

The weaker-than-expected European data suggests that any boost to gross-domestic-product growth will take longer to materialize, said Brian O'Reilly, head of investment strategy at the Dublin-based Mediolanum International Funds.

"There was definitely a sense of euphoria that was priced into the market," Mr. O'Reilly said. "But we are not expecting a rebound in global GDP at least until the middle of this year. We think it will just take time for confidence to build."

The U.K.'s FTSE 100 index dropped about 1.3% after the country reported its first two cases of the virus. The number of people sickened by the new coronavirus in China now exceeds the global total infected with severe acute respiratory syndrome, or SARS, which killed nearly 800 people after emerging from southern China in late 2002 and spreading into 2003.

Write to Will Horner at William.Horner@wsj.com and Gunjan Banerji at Gunjan.Banerji@wsj.com

(END) Dow Jones Newswires

January 31, 2020 12:57 ET (17:57 GMT)

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