On Tuesday, Wall Street opened lower as feeble Chinese economic data and an unexpected rate decrease by the Australian central bank heightened concerns about the health of the global economy. Activity at China’s factories contracted for the 14th consecutive month in April as demand paused, a private survey showed. Australia’s central bank also leaped a surprise by cutting interest rates to a record low of 1.75 percent, the first fall in a year as it looks to restrain a advancing currency and insulate the economy from creeping deflation. “The negative news out of China and Australia having to stimulate its economy again is spooking the market today,” stated Peter Cardillo, chief market economist at First Standard Financial. “The market is in the midst of a pullback and nervous about lower growth, which might mean weaker earnings in the coming quarters.”
During Tuesday morning’s trading session, the Dow Jones industrial average fell 130.46 points, or 0.73%, at 17,760.7, the S&P 500 dropped 14.51 points, or 0.7%, at 2,066.92 and the Nasdaq Composite fell 32.71 points, or 0.68%, at 4,784.88. Next, nine of the 10 major S&P sectors dropped, with the energy index’s. SPNY 1.48 percent fall front running the decliners. Oil prices also dropped as increasing output from the Middle East and North Sea renewed worries about a global supply surplus. The S&P has increased 14% since February, assisted by rallying oil prices and an accommodative Fed. Though the index faded last week, pressured by weak earnings and mixed economic data.
Though, first-quarter earnings from S&P 500 companies have mostly rough analysts’ projections, they are still anticipated to drop 5.7% from the year prior, according to data. The Fed, which held monetary policy steady last week, is focusing on data, while keeping their door open for a rate increase in June. The U.S could see two more interest rate gains this year but uncertainties around including the impact on the economy should Britain vote to leave the European Union, stated by Atlanta Fed President Dennis Lockhart on Tuesday. Still, traders are pricing in only one rate hike at the end of the year. Investors will be closely monitoring on unemployment numbers at the end of the week for signals confirming that the labor market continues to increase in strength. Declining issues outnumbered advancing ones on the NYSE by 2,217 to 485. On the Nasdaq, 1,729 issues dropped and 568 gained. The S&P 500 index showed five new 52-week highs and one new low, while the Nasdaq recorded seven new highs and 16 new lows.