Wall Street recorded its worst day in almost a month on Tuesday as investors ditched equities following a stock sell-off in China and weak US retail sales data.
The blue-chip S&P 500 closed down 0.7 per cent, its steepest fall since mid-July. The tech-focused Nasdaq Composite was 0.9 per cent lower at the bell, its biggest drop since late-July.
The declines come a day after the S&P 500 finished at a record high, having doubled from lows it recorded during the market turmoil of March 2020.
The Commerce Department on Tuesday morning reported that US retail sales fell 1.1 per cent in July compared to June, worse than the 0.3 per cent decline expected by economists surveyed by Bloomberg.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the numbers were not as bad as they looked on the surface and that several one-off factors may have had an influence.
“It’s impossible to separate the impact of the fading stimulus boost from the possible hit due to the Delta variant, which began to hit real-time indicators like restaurant diner and airline passenger numbers in late July,” he said. “The Delta hit likely will be bigger in August, so we have to scale back our hopes for third-quarter consumption quite sharply.”
The data follow a survey from the University of Michigan that showed that consumer sentiment cooled sharply early this month.
Jay Powell, Federal Reserve chair, spoke on Tuesday, but did not comment on monetary policy. Investors on Wednesday will be watching the release of minutes from the Fed’s last policy meeting for insight into the central bank’s plans to scale back its expansive policies to stimulate the US economy.
The US 10-year Treasury yield, which moves inversely to price, oscillated throughout the trading day but ended Tuesday little changed at 1.26 per cent.
Across the Atlantic, Europe’s Stoxx 600 ended the day almost flat as did Germany’s Dax. France’s CAC 40 fell 0.3 per cent. London’s FTSE 100 closed 0.4 per cent higher as investors cheered restructuring plans by miner BHP Group, the index’s second-largest company.
In Asia, Hong Kong’s Hang Seng shed 1.7 per cent and China’s CSI 300 dropped 2.1 per cent. Stocks of car company Geely and tech groups Tencent and Alibaba were among the biggest fallers in Hong Kong, all shedding at least 3 per cent.
Meanwhile, the New Zealand dollar slumped 1.4 per cent against the US dollar to $0.692 after Jacinda Ardern, prime minister, announced a three-day lockdown following detection of the first community spread of coronavirus since February.
The market jitters in Asia highlight the growing unease among some traders and investors over slowing growth in China and the spread of the Delta variant of coronavirus.
Oil prices fell on Tuesday as concerns mounted that increases in the Delta variant would dent travel demand. Brent crude, the global benchmark, settled 0.7 per cent lower at $69.03 a barrel. The US benchmark, West Texas Intermediate, fell 1 per cent to $66.59 a barrel.