A sharp drop for Wall Street capped a day of declines worldwide after discouraging data on China raised worries about the global economy. The S&P 500 fell 1.86 points, or 1.2%, to 4,437.86 Tuesday after reports indicated a deepening slump for the world's second-largest economy. The Dow Jones Industrial Average fell 361.24 points, or 1%, to 34,946.39. The Nasdaq composite fell 157.28 points, or 1.1%, to 13,631.05. A separate report on the US economy showed sales growth at retailers accelerated last month. That raises hopes the economy can avoid a recession. But in a downside for markets, it also heightened the threat that the Federal Reserve will keep interest rates high for longer to snuff out inflation.
Coming into this year, the expectation was that China's economy would grow enough after the government removed anti-COVID restrictions to prop up a global economy weakened by high inflation. But China's recovery has faltered so much that it unexpectedly cut a key interest rate on Tuesday and skipped a report on how many of its younger workers are unemployed, the AP reports. Worries about the knock-on effects for the rest of the global economy are weighing on Wall Street, where stocks have already been retrenching in August.
The price for a barrel of US crude oil dropped 2.1% to $80.76. Prices also fell for Brent crude, the international standard, and for copper. The declines meant stocks of energy and raw-material producers were among the biggest losers in the S&P 500. Exxon Mobil's 2.6% drop was one of the heavier weights on the index. Banks were also falling, continuing a rocky run since the high-profile failures of several during the spring that were caused in part by higher interest rates. The largest loss came from Discover Financial Services. It dropped 9.4% after it said its CEO is stepping down, effective immediately.
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Elsewhere on Wall Street, more reports on corporate profits that came in better than expected helped to limit the market's losses. Home Depot gained 0.7% after it topped expectations for both revenue and profit, though it's feeling the effects of much higher interest rates. The home improvement retailer said it's seeing continued pressure on some types of big-ticket projects.
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