Wall Street slips as weak China data fuels slowdown fears

Traders work on the floor of the New York Stock Exchange in New York. — Reuters pic
Traders work on the floor of the New York Stock Exchange in New York. — Reuters pic

NEW YORK, Sept 11 ― Technology stocks led the Wall Street into the red yesterday as recessionary fears, fuelled by declining producer prices from China, dampened investor risk appetite.

A gain in industrials cushioned the blue-chip Dow's slide, and the tech-heavy Nasdaq was on track for its third straight decline.

“It looks like a move from growth to value but it's too early to say if it's a shift or a trade,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.”

China producer prices, or the prices factories get for the goods they make, fell last month at their sharpest pace in three years as the country grapples with its bruising trade war with the United States.

“The weakness coming out of China reflects a slowing economy as a result of trade negotiations,” Hellwig added.

Hellwig believes, however, that weakness could grease the wheels in Sino-US trade negotiations.

“The consensus is that time is on the side of China, but in the short term, as they see their economy slow and as supply chains shift, that puts pressure on them to get a deal done,” said Hellwig.

Indeed, China is expected to buy more agricultural products to position itself for a better trade deal, according to a report from the South China Morning Post.

The underwhelming data from China weighed on tariff-sensitive technology stocks, which were down 1.1 per cent.

Amid signs of a global economic slowdown, market participants largely expect the US Federal Reserve and the European Central Bank to cut interest rates over the next two weeks, and Germany's finance minister suggested the nation was prepared for a big stimulus package if its economy tips into recession.

The news from Germany sent US Treasury yields higher, tracking German bonds.

The Dow Jones Industrial Average fell 36.11 points, or 0.13 per cent, to 26,799.4, the S&P 500 lost 11.06 points, or 0.37 per cent, to 2,967.37 and the Nasdaq Composite dropped 39.53 points, or 0.49 per cent, to 8,047.90.

Of the 11 major sectors in the S&P 500, seven were lower, with real estate and tech seeing the biggest percentage drops.

Energy was the biggest percentage gainer, boosted by what appears to be the fifth consecutive daily increase in oil prices.

Wendy's Co dropped 9.6 per cent after the fast food chain projected a drop in full-year 2019 adjusted earnings.

Wendy's rival McDonald's Inc announced it would buy Silicon Valley start-up Apprente. Its stock dipped 3.4 per cent.

Ford Motor Co's bond rating was downgraded to junk by Moody's, sending the automaker's shares down 2.6 per cent.

Mallinckrodt Plc, having been plagued by opioid litigation uncertainties, announced it would sell BioVectra Inc to private equity firm HIG. Capital for up to US$250 million (RM1.04 billion), sending the drugmaker's shares surging 75.7 per cent higher.

Francesca's Holdings Corp shot up 74.8 per cent after the specialty retailer posted better-than-expected second quarter results.

Advancing issues outnumbered declining ones on the NYSE by a 1.42-to-1 ratio; on the Nasdaq, a 1.66-to-1 ratio favoured advancers.

The S&P 500 posted 13 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 35 new highs and 36 new lows. ― Reuters

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