Wall Street falls after weak data from China and local retail sales numbers

The stock markets global level registered a decrease this Tuesday due to the concern generated due to the incipient economic recovery from China and his possible impact on the global economy.

In the day, the S&P 500 index suffers a fall of 1%, while the Dow Jones Industrial Average it falls 0.8% to reach 35,023.92 points. Simultaneously, the compound nasdaq experiences a decrease of 0.7%%.

At the beginning of the year, the economy was expected to China will recover after the removal of anti-COVID restrictions, which was seen as crucial to strengthening a world economy weakened by high inflation. However, the economic recovery of the Asian giant has been seriously questioned, so much so that on Tuesday it was unexpectedly cut a key interest rate and omitted a report on the number of workers unemployed youth.

Growing concern about the implications of the Chinese economy for the rest of the world has exerted a noticeable pressure on Wall Street, where the shares had already experienced setbacks during the month of August. This fall adds to a first semester of the year that some critics describe as exaggerated.

Wall Street and the global landscape

Despite this global outlook, the economy of USA has maintained surprising resistance, even due to rising interest rates. A recent report revealed that US retail sales growth accelerated in July, exceeding economists’ expectations.

brian jacobsonchief economist at Annex Wealth Management, noted that the strong performance of retail sales in the United States could be linked to the use of credit cardsand that, despite some signs of a slowdown, the US consumer continues to show strength.

This continued spending by American consumers has been a key factor in avoiding recession which has been predicted for a long time. The economy has shown resilience even in the face of a strong labor market, despite high interest rates.

Positive report on US retail sales raises hopes for the country’s economybut it may also intensify the determination of the Federal Reserve to keep interest rates high in order to control inflation. The Federal Reserve has already pushed its base interest rates to levels not seen in more than two decades, and this decision has significant repercussions for the entire economy.

Mike Loewengart, Head of Model Portfolio Construction at Morgan Stanley Global Investment Officeindicated that figures such as those presented increase the probability that rates will continue to rise in the future, even if the Federal Reserve does not take that measure next month.

Treasury yields experienced an initial increase after the positive retail sales reportapproaching levels similar to those of the Great Recession of 2007-09, although they subsequently declined.

The weakness in the Chinese economy could translate into lower demand for oil and other raw materials. As a result, the price of a barrel of US crude fell by 2.4%, reaching 80.51 dollars. The prices of Brent crude, the international standard, as well as copper, also suffered falls.