U.S. equities opened lower on Tuesday as disappointing economic data out of China raised concern about the global economy.
The Dow Jones industrial average fell 70 points at the open, with GE as the biggest declining stock. GE shares fell 2.4 percent and have fallen about 9 percent over the past two days, after the company unveiled a massive restructuring plan and slashed its dividend by 50 percent.
The S&P 500 declined 0.36 percent, with materials as the biggest declining sector. TJX was among the worst performers in the index, falling 3.2 percent.
The Nasdaq composite pulled back 0.3 percent.
This reaction is “not that strange given we’re near all-time highs,” said Art Hogan, chief market strategist at Wunderlich Securities. “We’ve got global synchronized economic growth and China is a very important part of that. If there’s a slowdown there, that would spill over into global markets.”
Chinese data released overnight on retail sales, industrial output and fixed asset investment growth all missed expectations. Asian equity markets closed mostly lower, with the Shanghai composite slipping 0.5 percent. European stocks followed suit, with the broad Stoxx 600 index declining half a percent.
The Chinese 10-year yield hit its highest level in three years and copper prices fell following the data releases.
“China’s economy will inevitably slow further if we actually see slower credit growth and now we have rising interest rates,” Peter Boockvar, chief market analyst at The Lindsey Group, said in a note.
Wall Street also paid attention to the retail space, as several companies in the industry reported quarterly results on Tuesday.
Dow-component Home Depot reported earnings and revenue that beat expectations. Same-store sales — a key metric for retailers — crushed estimates. But the stock traded 0.9 percent lower.
TJX Companies, the parent company of TJ Maxx, posted earnings per share that were in line with expectations, while revenue missed. But The company’s stock fell after its same-store sales for the quarter remained flat. Analysts polled by Reuters expected a gain of 2.3 percent.
In economic news, the U.S. producer price index rose 0.4 percent in October. Economists polled by Reuters expected an increase of 0.1 percent.
“The PPI data exceeded expectations across the board as wholesale prices continue to adhere to its uptrend that began in early 2016. This inflationary pressure has yet to spill over to Main Street,” said Jeremy Klein, chief market strategist at FBN Securities, in a note.
The short-term two-year note yield traded higher at 1.691 percent following the data’s release. But the 10-year yield fell to trade at 2.39 percent.
“If inversion becomes a viable concern, then investors across the capital markets will dump risk accordingly,” said FBN’s Klein, referring to the possibility of an inverted yield curve.