The Dow Jones Industrial Average fell as many as 200 points on Tuesday as fears of a global growth slowdown continue to permeate the broad market.
Top decliners for the Dow in the early trading session included DowDuPont Inc, Caterpillar Inc and Goldman Sachs Group Inc. The S&P 500 and Nasdaq Composite were both down about 1 percent.
China’s economy grew at a rate of 6.6 percent last year based on numbers coming out of China’s government. The figure was in line with analyst expectations, but represented its slowest pace of growth in almost 30 years.
“Vice-Premier Liu He will arrive in the US with an array of gifts, including measures such as a reduction in excess car duties and increased purchases of farm products and energy as well as assurances that Beijing intends to make more moves on market opening, intellectual property and technology transfer,” Jonathan Fenby, chairman of the China team at TS Lombard wrote. “But the structural issues remain and present fundamental difficulties.”
As ongoing trade negotiations with the U.S. and China continue, this is the primary trigger event the markets are waiting for.
“In the end, it will all depend on how Trump decides between a short-term outcome and longer-term aims, which will involve broader domestic political calculations,” Fenby added.
IMG Cuts Global Growth Forecast
Meanwhile, fears of a global economic slowdown were stoked on Monday when the International Monetary Fund trimmed its growth expectations to 3.5 percent from 3.7 percent. Global growth outlook for 2020 was also cut to 3.6 percent from 3.7 percent.
U.S. equities, however, are riding a four-week winning streak in what’s been a strong start to the year after a volatile year’s end in 2018.
“As impressive as the recovery has been, there is still growing concern over the current V-shaped recovery due to correction lows historically being retested, as was the case in ’11 and ’16,” said Craig Johnson, chief market technician at PiperJaffray. “While recent history and an overcrowded consensus suggest the market may revisit the December lows, we believe there is sufficient evidence that also suggests a double-bottom is not mandatory for the current recovery process.”
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