Stocks End Lower on Chinese Growth Concerns
NEW YORK ( TheStreet) -- U.S. stocks edged lower on Tuesday following mixed housing market data and signs of a slowing Chinese economy.
The market pared losses through the afternoon, however. The Dow Jones Industrial Average fell 69 points, or 0.4%, to close at 13,170. The S&P 500 lost 4 points, or 0.3%, at 1406, with energy, consumer cyclical stocks, basic materials and transportation leading the losses. Auto makers declined after China began hiking gasoline prices Tuesday.
The Nasdaq closed behind by 4.2 points, or 0.1%, at 3074.
David Joyce, managing director of expansion projects at Rio Tinto, said Tuesday at a conference in Perth, Australia, that while China GDP growth is slowing, the company is confident that the country will see a soft landing with still solid growth for the year. His remarks come after China has already cut its GDP growth forecast for the year to an eight-year low of 7.5%.
China also said that starting on Tuesday it will raise retail gasoline and diesel prices a larger-than-expected 6% to 7%. The increase is the sharpest one in 33 months amid higher oil crude oil prices.
"All indications point to a slightly more aggressive downturn in the Chinese economy," said Mike Zarembski, commodity analyst at optionsXpress. Shanghai copper inventories have risen to well more than double what they averaged the prior quarter, which may cool demand for the commodity in the near term, he explained.
However, Zarembski also noted that the People's Bank of China is expected to ease interest rates and capital requirements in the intermediate future, which could limit the potential downside for risk assets.
Global stocks and commodities were declining following the news out of China. London's FTSE closed down 1.25%, and Germany's DAX was off 1.41%. In Asia, Japan's Nikkei Average settled up 0.12% and Hong Kong's Hang Seng index finished behind by 1.08%.
In the U.S., the Commerce Department reported Tuesday that February housing starts fell to a 698,000 annual pace from an upwardly revised 706,000 clip the previous month. Economists surveyed by Thomson Reuters were expecting the number to come in at 700,000. The bureau also reported that building permits for February rose to a notably better than expected 717,000 rate, from 682,000 in January. Economists were expecting building permits to come in at a 690,000 rate.
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"While we believe the recent recovery in housing is real, the single-family category may be challenged in the next few months as the boost from unseasonably mild weather fades," said RBS economists.