Even a strong retail sales report could not stem the decline in the Dow Jones Industrial Average and other major indexes as China’s disappointing economic data rattled markets on Wednesday.
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On the stock market that day, the Dow Jones stock was trading down 0.2%, and the S&P 500 was down 0.6%. Of the S&P’s 11 sectors, consumer staples and health care fared better than the others.
Meanwhile, the Nasdaq Composite had narrowed its loss to 1% by midday. The small-cap Russell 2000 index also underperformed, dropping 1%.
Volume on the New York Stock Exchange and Nasdaq was down compared to the same period on Tuesday. Both exchanges narrowed the range, with declining issues outnumbering advancing issues by nearly 3 to 1.
Innovator IBD50 (FFTY) exchange traded fund fell 1.1%. However, the yield on the benchmark 10-year Treasury note rose 3 basis points to 4.11%.
China GDP news spooks markets
China’s gross domestic product (GDP) report disappointed investors early on. Although China’s economy has recovered from the coronavirus lockdown, gross domestic product (GDP) in 2023 increased by only 5.2% compared to the previous year.
This was the lowest growth rate since 1976, excluding 2020, which was plagued by the coronavirus pandemic. GDP in the fourth quarter was also 5.2%, slightly lower than expected.
This was in contrast to the Commerce Department’s announcement on Wednesday that U.S. retail sales grew 0.6% in December, beating Econoday’s forecast of 0.4%. Retail sales excluding automobiles increased by 0.4%, viewership increased by 0.2%. Retail sales, excluding automobiles and gasoline, rose 0.6%, beating expectations for a 0.3% increase.
Remarks from Federal Reserve Chairman Christopher Waller on Tuesday warning of rapid interest rate cuts this year also added to the selloff. The probability of a 25 basis point rate cut in March is now 42.9%, according to the CME FedWatch tool.
Dow Jones stocks soar
Health care and banking executives rose in the Dow. Merck (MRK) and united health (UNH) acquired. boeing (BA) rose nearly 1% after a significant decline over the past few days. JP Morgan Chase (JPM) has fallen slightly and is still near the upper end of the buy zone.
Outside the Dow, interactive broker (IBKR) pared early losses and rose more than 2% after fourth-quarter earnings. The stock is in a cup with a handle and the buy point is 89.72.
At another financial company, charles schwab (SCHW) saw significant volume and fell below its 50-day moving average, triggering a sell signal. The stock had earlier attempted a breakout from the cup at a buy point of 68.80, but had languished above profits.
progress software (PRGS) rebounded from its 50-day line after the release of Q4 results. Sales rose 13%, but earnings per share were $1.02, down 9% compared to the same period last year. For the first quarter, the company expects revenue of $182 million and earnings per share of 1.16 cents.
tesla (TSLA) fell nearly 3% after announcing further price cuts in Europe, which could impact gross margins. Tesla is cutting the price of its Model Y Long Range and Model Y Performance by $5,400 in Germany, after making similar price cuts in China last week.
Magnificent Seven Stock Slide
Among the Magnificent Seven brands, Nvidia (NVDA) fell 1.4%. alphabet (Google), meta platform (meta) and Amazon (AMZN) also fell.
Meanwhile, Cathie Wood’s ARK Next Generation Internet ETF (ARKW) sold shares. Advanced Micro Devices (AMD) on Tuesday, according to a disclosure. AMD is up 128% in 2023 and 7% year to date in January.
Beyond the Dow Jones index, several IBD 50 constituents also fell sharply.
Some of the IBD 50 software leaders include: cloud strike (CRWD), samsara (IOT), cloudflare (NET) and Monday.com (MNDY) both fell more than 2%. mercadolibre (MELI) also fell 2%.
Even further away, P.D.D. (PDD) fell more than 2%, joining declines in other Chinese stocks. The Chinese e-commerce giant has pared some of its earlier losses.
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