Stocks slump on signs China’s economy is slowing

Trump meets with Chinese leader over tariffs

Investor concerns about China’s slowing economy have U.S. stocks off to a slow start.

Retail sales and industrial production in China both slowed in November. Ian Shepherdson thinks the softness in China’s industrial sector shows that the trade fight with the U.S. is taking a toll on both sides.

“The rollover in China’s industrial indicators points to further weakness ahead for U.S. manufacturing, illustrating why both sides need an agreement, and soon,” he said in a client note.

In early trading the Dow shed 298 points, or 1.2 percent, to 24,300, while the S&P 500 and Nasdaq also lost ground

Technology and internet companies, with Cisco Systems losing 2.5 percent and Facebook falling 1.5 percent. Shares of software maker Adobe dropped  4.7 percent after its fourth-quarter profit fell short of Wall Street estimates. 

Progress on trade

Investors were cheered earlier this week that tensions between Washington and Beijing were cooling. Chinese officials said Friday it is suspending for three months retaliatory tariff hikes U.S. cars, trucks and auto parts. China has also resumed purchases of soybeans from U.S. farmers.

Huawei CFO arrest stokes fears of trade war between China & U.S.

The move is China’s first step in response to President Donald Trump’s Dec. 1 agreement to suspend U.S. tariff hikes for a similar 90-day period while the two sides negotiate over American complaints about Beijing’s technology policy and trade surplus.

“This suggests that the Chinese are serious about reaching a deal and that trade talks haven’t been derailed by the Huawei incident,” Julian Evans-Pritchard, senior China economist with Capital Economics, said in a report. 

The arrest earlier this month of the chief financial officer of Huawei, a Chinese telecommunications company, at the behest of U.S. authorities had raised concerns about the trade talks. 

China expects its economy to grow 6.5 percent this year. While that is strong by global standards, it represents a decline from the country’s double-digit percentage growth several years.

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