Stock market today: Wall Street collapses along with markets worldwide after weak economic data from China

NEW YORK (`) – Stocks around the world tumble on Tuesday as China’s faltering recovery raises concerns for the rest of the global economy.

The S&P 500 slipped 1% in morning trade after data showed that was the case In July, the slump in the world’s second largest economy intensified. The Dow Jones Industrial Average was down 311 points, or 0.9%, to 34,996 as of 10:30 a.m. Eastern Time, and the Nasdaq Composite was down 1%.

Earlier this year, China’s economy was expected to grow sufficiently after the government lifted anti-COVID restrictions to prop up a global economy weakened by high inflation. But China’s recovery has stalled so badly that the country unexpectedly cut a key interest rate on Tuesday and omitted a report on how many of its younger workers are out of work.

Worries about the fallout for the rest of the world economy are weighing on Wall Street, where stocks fell back in August. The setback follows the first seven months of the year, which critics called excessive.

In the US, the economy has so far remained more resilient than expected despite higher interest rates. A report on Tuesday showed that sales growth at US retailers accelerated more in July than economists had expected.

“U.S. retail sales are growing, and credit cards could account for a lot of that,” said Brian Jacobsen, chief economist at Annex Wealth Management. “Yet the US consumer is showing little sign of slowing down.”

High spending by US consumers has helped keep the economy out of a long-predicted recession. This trend was maintained as the labor market remained solid even under the burden of very high interest rates.

The strong retail sales report raises hopes for the US economy but could also bolster the Federal Reserve’s resolve to keep interest rates high to fully contain inflation. The Fed has already raised interest rates to their highest level in more than two decades, and high interest rates are having a negative impact on the broader economy.

“Numbers like today’s only make it more likely that rates will remain high for longer, even if the Fed doesn’t hike them next month,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office.

After the retail sales report, government bond yields initially rose, approaching their highest levels since the Great Recession of 2007-2009 before falling.

A weakening Chinese economy could lead to lower demand for oil and other commodities.

The price of a barrel of US crude fell 2.4% to $80.51. Brent crude oil, the international standard, and copper prices also fell.

The declines meant that stocks of energy and commodity producers were among the biggest losers in the S&P 500. Miner Freeport-McMoRan fell 3.7%, and Exxon Mobil’s 1.9% decline was one of the strongest weights in the index.

Banks have also tumbled, continuing their rocky recovery since a series of high-profile bankruptcies in the spring, in part due to higher interest rates.

Smaller and mid-sized banks came under the closest scrutiny of investors and credit analysts, including KeyCorp, Comerica, Citizens Financial Group and Zions Bancorp. all fell at least 3.8% and posted some of the biggest losses in the S&P 500.

Elsewhere on Wall Street, more better-than-expected reports of corporate earnings helped limit the market’s losses.

Home Depot then gained 0.5% exceeded expectations on both sales and profits, although the impact of significantly higher interest rates is being felt. The home improvement retailer said it sees continued pressure on some types of large-scale projects.

After Warren Buffett’s stocks, homebuilders’ stocks have fluctuated between gains and losses Berkshire Hathaway announced that it has acquired stakes in several companies from them. Other investors often try to copy the famous investor’s moves, and DR Horton rose 0.4%.

In equity markets overseas, indices in Europe fell after falling 1% in Hong Kong and 0.1% in Shanghai.

Burdens occur worldwide. Also on Tuesday, the Russian central bank raised interest rates in an emergency measure to strengthen the ruble after the crisis The currency reached its lowest value since the beginning of the war with Ukraine. In the UK, data showed workers’ wages are rising sharply, which could add upward pressure on already high inflation.

Japanese equities were an exception. The Nikkei 225 rose 0.6% after Japan reported better-than-expected economic growth in the spring.

In the bond market, the yield on the 10-year government bond fell to 4.18% from 4.20% late Monday. It helps set interest rates on mortgages and other major loans.

The two-year Treasury yield, which is more in line with Fed expectations, fell to 4.92% from 4.97%.

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` business journalists Joe McDonald and Matt Ott contributed to this report.