Wall Street opened lower Tuesday as weak Chinese economic data and a surprise rate cut by the Australian central bank fanned worries about the health of the global economy.
Activity at China’s factories shrank for the 14th straight month in April as demand stagnated, a private survey showed.
Australia’s central bank also sprang a surprise by cutting interest rates to a record low of 1.75 percent, the first easing in a year as it seeks to restrain a rising currency and insulate the economy from creeping deflation.
“The negative news out of China and Australia having to stimulate its economy again is spooking the market today,” said Peter Cardillo, chief market economist at First Standard Financial in New York.
“The market is in the midst of a pullback and nervous about lower growth, which might mean weaker earnings in the coming quarters.”
At 9:39 a.m. ET (1339 GMT) the Dow Jones industrial average .DJI was down 130.46 points, or 0.73 percent, at 17,760.7, the S&P 500 .SPX was down 14.51 points, or 0.7 percent, at 2,066.92 and the Nasdaq Composite .IXIC was down 32.71 points, or 0.68 percent, at 4,784.88.
Nine of the 10 major S&P sectors were lower, with the energy index’s .SPNY 1.48 percent fall leading the decliners.
Oil prices fell as rising output from the Middle East and North Sea renewed concerns about a global supply overhang. [O/R]
The S&P 500 has jumped 14 percent since mid-February, helped by recovering oil prices and an accommodative Federal Reserve. However, the index faltered last week, weighed down by lackluster earnings and mixed economic data.
Although first-quarter earnings from S&P 500 companies have mostly beaten analysts’ expectations, they are still expected to fall 5.7 percent from a year earlier, according to Thomson Reuters data.
The Fed, which held monetary policy steady last week, is focusing on data, while keeping the door open for a rate hike in June.
The United States could see two further interest rate hikes this year but uncertainties abound including the impact on the economy should Britain vote to leave the European Union, Atlanta Fed President Dennis Lockhart said on Tuesday.
Still, traders are pricing in only one rate hike at the end of the year.
Investors will be keeping an eye on unemployment numbers at the end of the week for signs confirming that the labor market continues to gain in strength.
Shares of drugmaker Pfizer (PFE.N) were up 2.2 percent at $33.50 after the company reported a rise in quarterly revenue.
American International Group (AIG.N) fell 2.3 percent to $55.22 after reporting a lower-than-expected profit for the third straight quarter.
Declining issues outnumbered advancing ones on the NYSE by 2,217 to 485. On the Nasdaq, 1,729 issues fell and 568 advanced.
The S&P 500 index showed five new 52-week highs and one new low, while the Nasdaq recorded seven new highs and 16 new lows.