Stocks fall as China’s economy shrinks

Stocks fall as China's economy shrinks

US stocks fell in a lackluster start to the trading week after equity markets rallied to their longest winning streak in 10 months on Friday.

The S&P 500 fell 0.5% after the benchmark index marked its fourth straight week of gains in the previous trading session, officially recouping half of this year’s bear market losses. The Dow Jones Industrial Average was down 170 points, or about 0.5%, and the Nasdaq Composite was down 0.3%.

A measure of manufacturing activity in New York state posted its second-biggest drop since 2001, with declines in orders and shipments reflecting a dramatic drop in demand.

Data from China on Monday showed a slowdown in overall economic activity last month. The world’s second-largest economy saw retail sales, industrial production and investment come in lower than economists expected in July.

China’s central bank also unexpectedly cut its key interest rate in an effort to reverse lagging economic growth as President Xi Jinping seeks re-election.

The The Wall Street Journal reported that Chinese officials are arranging plans for a face-to-face meeting between Xi Jinping and President Biden in Southeast Asia this fall, a trip that would mark their first in-person meeting since Biden was inaugurated.

Oil futures fell on concerns about demand in China and the prospect of higher exports from Iran. U.S. West Texas Intermediate and Brent crude fell about 4.5 percent to $87.97 and $93.66 a gallon, respectively.

China’s President Xi Jinping waves after his speech following an inauguration ceremony of the city’s new leader and government in Hong Kong, China, July 1, 2022, on the 25th anniversary of the handover from UK city in China. Selim Chtayti/Pool via REUTERS

Back in the United States, investors have cheered the summer recovery after a series of better-than-expected economic releases renewed optimism on Wall Street. But some strategists remain skeptical of a market rally, as risks associated with inflation and monetary tightening persist.

“The macro, political and earnings setup is much less favorable for stocks today,” Morgan Stanley’s Michael J. Wilson wrote in a note. “The risk/reward is unattractive and this bear market remains incomplete.”

The story continues

Investors are expecting a busy week for retail sales, with the Commerce Department releasing its key monthly report Wednesday on retail sales and earnings for Walmart ( WMT ), Target ( TGT ), Home Depot ( HD ) and other consumer giants. .

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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About the Author: Chaz Cutler

My name is Chasity. I love to follow the stock market and financial news!