Stocks pressured as China's economic data slumps - Yahoo Finance

Stocks pressured as China's economic data slumps

Stocks opened lower Wednesday as a recovery rally from the session prior lost steam.

The S&P 500 (^GSPC) fell 0.55%, or 15.7 points, as of 9:37 a.m. ET. The Dow (^DJI) declined 0.67%, or 171.79 points, while the Nasdaq (^IXIC) fell 0.43%, or 33.34 points.

On Tuesday, stocks ended in the green as investors weighed the prospects of further trade talks with China ending in a deal. President Donald Trump said earlier this week that he plans to meet with China’s Xi Jinping at the G20 summit at the end of June, potentially providing an avenue to make strides in reaching a trade agreement.

Through Tuesday’s close, the S&P 500 was down 3.8% since May 3, the last trading session before Trump announced a higher rate of tariffs on billions of dollars worth of Chinese goods, sending financial markets reeling over the past week and a half. China has since vowed to retaliate with tariffs on U.S.-made goods starting at the beginning of June.

Wednesday morning, weaker-than-expected new retail sales and industrial output data from China stoked fears of a slowdown in the world’s second largest economy amid an escalating trade war with the U.S.

Retail sales, a proxy for consumer strength, rose 7.2% year-over-year in China, marking the weakest pace of growth since 2003 and underperforming against estimates for 8.6% growth.

China’s industrial output rose 5.4% year-over-year in April, also missing expectations. The disappointing new data from the country’s key manufacturing sector reversed the apparent rebound seen in March, when industrial output growth hit a four-and-a-half year high of 8.5%.

The tepid retail sales and industrial output results come after the Chinese government earlier this year unleashed a stimulus program to cut taxes and fees for companies in effort to prop up the economy.

Evidence of weak economic growth in China has been viewed by many analysts as a signal that the U.S. may have more leverage in negotiating a trade deal, as the domestic economy has shown continued signs of resilience based on recent GDP and labor market data.

Meanwhile, Trump is anticipated to sign an executive order that would ban U.S. companies from using telecommunication equipment produced by firms deemed to pose a national security risk – a move which would create a block on doing business with Chinese tech giant Huawei, according to a Reuters report.

Such action would likely add to tensions between the U.S. and China, given Huawei’s centricity to China’s goal of scaling the ranks to become a leader in global technology. The U.S. has alleged that Huawei’s equipment could be used by the Chinese state to spy, but the company has repeatedly denied these claims.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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