US Stock Market Shaken by Concerns Over China's GDP... Eyes on Retail Sales (Comprehensive)

[Asia Economy New York=Correspondent Baek Jong-min] Major indices on the New York Stock Exchange showed mixed trends for the second consecutive day.

[Image source=Reuters Yonhap News]

On the 15th (local time), the Dow Jones Industrial Average rose by 53.79 points (0.15%) to close at 34,987.02, the S&P 500 index fell by 14.27 points (0.33%) to 4,360.03, and the Nasdaq index dropped by 101.82 points (0.70%) to 14,543.13.

On that day, the 10-year U.S. Treasury yield fell to around 1.30%, but the Nasdaq showed weakness while the Dow rose. The Treasury yield hit its lowest level since mid-February.

The market reacted sensitively to China's second-quarter gross domestic product (GDP) growth rate, which was recorded at 7.9%.

Analysts believe that the slowdown in growth in China, which had led the global economic recovery along with the U.S., weighed on the indices.

Jerome Powell, Chairman of the Fed, who appeared before the Senate, also said that recent inflation far exceeds the 2% target and that his confidence in the economic outlook has somewhat declined compared to earlier this year, which is seen as a factor that fueled the market decline.

As a result, major tech stocks including Apple, which had soared to record highs, as well as Amazon, Facebook, and Alphabet, all fell simultaneously.

The weekly U.S. initial jobless claims announced that day were 360,000, the lowest since March 2020, continuing expectations for employment recovery.

However, the industrial production for June, announced afterward, increased by only 0.4% compared to the previous month, falling short of experts' forecast of a 0.6% increase and the revised 0.7% increase for the previous month, signaling a possible brake on economic expansion.

It was confirmed that manufacturing, especially the automobile sector, has been significantly affected by production cuts due to semiconductor shortages in the U.S. industrial sector.

Market attention is focused on the retail sales results to be announced the following day.

Retail sales are expected to have decreased by 0.4% in June following a 1.3% decline in May. Depending on the retail sales results, a more precise diagnosis of the U.S. economy is likely. If consumption decreases, pressure on the Federal Reserve's monetary policy normalization could also ease.

Despite the decline in Treasury yields, investment bank Morgan Stanley succeeded in rising based on strong earnings.

The average earnings per share of 18 S&P 500 companies that reported earnings were 18% higher than expected, but their stock prices fell by 0.58% after the earnings announcements.