Wall Street slips as global growth concerns hit tech stocks
(Reuters) – A fall in technology stocks pulled Wall Street’s main indexes lower on Tuesday as weak economic data from China revived global recession fears, but losses were tempered by hopes on trade.
FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., September 9, 2019. REUTERS/Brendan McDermid
China’s factory-gate prices shrank 0.8% in August, the sharpest pace of decline in three years, as businesses slashed prices to cope with flagging demand amid a bruising trade war with the United States that has slowed growth in the world’s second largest economy.
“A slowdown in China is clearly a sign that global deceleration of economic activity is real and is something we’re going to have to deal with,” said Omar Aguilar, chief investment officer of equities and multi-asset strategies at Charles Schwab Investment Management.
Offering some respite, a report from South China Morning Post said Beijing is expected to agree to buy more agricultural products in hopes of a better trade deal with the United States.
Analysts attributed some of the selloff in tech to investors re-distributing wealth into stocks that have underperformed during the year.
Tech stocks .SPLRCT, the best performer on the S&P 500 with a 28% surge this year, fell 1.13%, while the energy sector .SPNY, the year’s worst performer, jumped 1.78%.
Real estate .SPLRCR fell 1.94, the most among the 11 major S&P sectors. The sector is the second best performer of the year, gaining 24%.
“It’s less about risk and more about returns – taking profits and reallocating to the losers,” Aguilar said.
Trading so far this week has largely been subdued as investors hold out for policy decisions from central banks on potential monetary easing. The European Central Bank will hold its policy meeting on Thursday.
The U.S. Federal Reserve and the ECB are widely expected to cut interest rates over the next two weeks, but investors doubt the extent to which central banks’ measures will stem an economic slowdown.
At 12:09 p.m. ET the Dow Jones Industrial Average .DJI was down 36.44 points, or 0.14%, at 26,799.07, the S&P 500 .SPX was down 13.08 points, or 0.44%, at 2,965.35 and the Nasdaq Composite .IXIC was down 43.83 points, or 0.54%, at 8,043.61.
Among other stocks, Apple Inc (AAPL.O) dipped 0.3% ahead of an event where it is widely expected to unveil its latest iPhones.
Boeing Co’s (BA.N) plane deliveries fell 72% in August, pushing total deliveries so far this year down more than 40%, as the worldwide grounding of its best-selling 737 MAX jet enters its seventh month. Shares of the planemaker rose 2.2%.
Ford Motor Co (F.N) fell 2.7% after ratings agency Moody’s downgraded its bonds to junk status overnight.
Advancing issues outnumbered decliners by a 1.30-to-1 ratio on the NYSE and by a 1.53-to-1 ratio on the Nasdaq.
The S&P index recorded 11 new 52-week highs and two new lows, while the Nasdaq recorded 28 new highs and 34 new lows.
Reporting by Uday Sampath in Bengaluru; Editing by Saumyadeb Chakrabarty and Arun Koyyur