US stocks fall as confidence fades in global economic growth

Stocks on Wall Street fell and bond yields rose amid mixed data from key global economies and as trade negotiations between the US and China continued.

A rare spurt of synchronised global growth at the end of last year and the beginning of 2018 has underpinned stock markets around the world.

But a Bank of America Merrill Lynch survey of global investors found only 1% thought the world economy will strengthen over the next 12 months, the lowest level since February 2016.

Latest US economic data have also been coming in below expectations in recent months.

The Dow Jones Industrial Average declined 193.00 points, or 0.8%, to 24,706.41, ending an eight-session winning streak. The S&P 500 dropped 0.7% to 2711.45 and the Nasdaq Composite fell 0.8% to 7351.63.

Most sectors in the S&P 500 fell while energy rose less than 0.1%. Home Depot dropped 1.3%, weighing on the Dow industrials after the company’s quarterly sales came in short of expectations.

The yield on the 10-year US Treasury note rose to 3.091%, its highest level since 2011, from 2.995% on Monday.

The Commerce Department said retail sales rose 0.3% on an adjusted basis in April, which was in line with expectations. Retail sales also increased in March, after falling for three months in a row.

Ryan Kelley, portfolio manager at Hennessy Funds, said the latest retail sales numbers sparked worries inflation could pick up, forcing the US Federal Reserve to increase rates faster than planned.

“It’s just simply a pause in a  strong past eight days,” he says.

Inflation worries also cropped up in the latest survey from the National Association of Home Builders, which pointed to rising costs of timber.

DR Horton, Lennar and PulteGroup all dropped more than 4%.

Other data showed growth in the eurozone economy slowing to 0.4% in the first quarter from 0.7% in the fourth quarter of last year.

Economic activity cooled in Germany, France and the Netherlands.

The Stoxx Europe 600 rose 0.05%. France’s CAC 40 was up 0.2%, Germany’s DAX eased 0.06% and the UK’s FTSE 100 climbed 0.2%.

China, meanwhile, reported mixed results for business activity, adding to signs of cooling in the world’s second-biggest economy. 

Industrial output quickened last month from a year earlier but investment and retail sales slowed.