- US stocks fell Monday as investors assess downbeat data from China.
- China’s central bank cut two interest rates in a bid to bolster liquidity.
- Reports of slower growth at China’s factories and retail sales drove down oil prices.
US stocks dropped Monday as China printed lower-than-expected economic data and unexpected interest rate cuts, prompting concerns about the outlook for global growth.
The S&P 500 and the Nasdaq Composite lost ground after posting their fourth consecutive week of gains last week during which the Nasdaq climbed out of its bear market.
Monday’s drop was ignited after China, the world’s second-largest economy, posted factory output and retail sales figures that missed expectations. Industrial output growth of 3.8% in July and retail sales growth of 2.7% were under expectations of 4.3% and 4.9%, respectively, according to Bloomberg.
China’s central bank cut two interest rates in a bid to boost short-term liquidity.
Here’s where US indexes stood shortly after the 9:30 a.m. opening bell on Monday:
“The economic data from China overnight was very disappointing, to put it mildly. Combined with the lending figures on Friday, it does not paint a good picture of domestic demand or the growth outlook,” said Craig Erlam, senior market analyst, at Oanda, in a note.
The decision by the People’s Bank of China to cut its main lending rate to large commercial banks and its seven-day reverse repo rates by 10 basis points overnight “came as quite the surprise,” Erlam said. “It seems no one saw that coming and it’s understandable why. Loan demand isn’t struggling because of high rates – it’s COVID lockdowns, ongoing property market uncertainty, and the global environment.”
Around the markets, Saudi Aramco, Saudi Arabia’s state oil company, posted a 90% jump in quarterly profit as oil prices soared.
Bitcoin declined 1% to $24,084.04.