U.S. equities posted a lower reading on Monday, putting Wall Street on track to begin easing after another positive week, as investors prepared to scrutinize company earnings reports.
The Dow Jones Industrial Average fell 135 points, or 0.4%. The S&P 500 and Nasdaq Composite were down 0.44% and 0.3% respectively.
Monday's move came after disappointing Chinese economic data overnight. The country's central bank also cut rates unexpectedly, raising concerns about China's economic recovery.
Fears of an economic recession are seen to be increasing around the world. China's economy contracted in 2Q. The US recorded a 'technical recession.' The flow of natural gas to Western Europe was restricted. In the past three months, Morgan Stanley's has revised its global growth forecast to 2.5%Y in 2022, which is about 50bp below consensus and 40bp lower than in May.
Last week the S&P 500 rose 3.25% to post its fourth straight positive week and longest surge since 2021. The Nasdaq Composite ended the week 3.08% higher, also for the fourth week in a row. Dow Jones on the other hand added 2.9%.
The gains came after economic data showed inflationary pressures may ease slightly. The consumer price index was unchanged from June to July, the producer price index showed a surprise decline and import prices fell more than expected.
Investors are looking forward to earnings from major retailers including Home Depot, Walmart and Target, and for clues on business growth amid inflation and other macro challenges in the latest quarter.
