(Aug 16) U.S. stock market opens lower Monday amid weak China demand, spread of delta variant.
Dow, S&P 500, Nasdaq Composite off 0.3% in early Monday action.
Data showed Chinese economic growth slowing more than expected. China’s retail salesincreased by 8.5% in Julyyear-over-year, below the 11.5% forecast from economists polled by Reuters. Online sales gained just 4.4% for the month. On the manufacturing sector in the country, industrial production increased by 6.4%, below the 7.8% consensus estimate.
The country’s National Bureau of Statistics noted an impact from Covid and domestic flooding, saying the country’s “economic recovery is still unstable and uneven.”
“Delta driven slowdown grips China,” wrote CNBC’s Jim Cramer in a tweet. “Not sure of impact here yet.”
Shares of stocks linked to a fast-recovering economy were weak in morning trading. Shares of Caterpillar, Freeport-McMoRan and Nucor dipped.
U.S. stocks also pulled back amid growing support within the Federal Reserveto announce a tapering of its bond purchases in Septemberand begin the reduction in buying a month or so after. Interviews with central bank officials along with their public comments show growing support for a faster taper timeline than markets had expected a month ago.
The yield on the benchmark 10-year Treasury note dipped to 1.248%. Bond yields fall as their prices rise.
Tesla’s stock retreated Monday after the National Highway Traffic Safety Administration announced aformal probeinto the electric vehicle maker’s Autopilot partially automated driving system.
The Dow ended last week at 35,515.38, a record close, while theS&P 500finished Friday at 4,468.00 to notch its own best-ever finish.
The blue-chip Dow and the S&P 500 rounded out the week with muted gains of 0.8% and 0.7%, respectively, amid light summertime trading volumes. The tech-heavy Nasdaq Composite underperformed week, down just under 0.1%.
The major stock indexes for much of the last month have ground to new records on the back of robust corporate earnings results. The S&P 500 has closed at a record high 48 times this year out of 155 trading days, or 31% of the time — the most frequent closing highs on record back to 1950.
Eighty-seven percent of S&P 500 companies have reported positive earnings per share surprises for the second calendar quarter, according to FactSet as of Friday. If 87% is the final percentage, it will mark the highest percentage of S&P 500 companies reporting positive EPS surprises since FactSet began tracking this metric in 2008.
“These are the dog days of August, and low volume and directionless volatility are the order of the moment with 2Q21 earnings season mostly behind us,” Raymond James’ Tavis McCourt said in a note.
Investors await quarterly earnings reports frommajor retailersthis week including Home Depot, Walmart, Target and Lowe’s.