Dow Takes A Major Dive on Weak China Data

US stock futures have fallen for the second consecutive day on the heels of shifting trade relations between the United States and China.  Without improvements in this relationship, investors feel little confidence in equities at all.

As such, March futures took a pretty big dive with a 0.9 percent dip on the Standard & Poors 500 Index, in London, upon word of the Asian markets extending their losses.  With the Chinese ban on some models of the iPhone Apple Inc said that it will have to settle a very long and equally bitter licensing battle with Qualcomm, Inc.  Also, Nasdaq 100 Index futures dropped 1.1 percent and Dow Jones Industrial Average futures slid 0.8 percent.

The economic data coming out of China did its part to hurt investor sentiment, as well.  At the end of the week, China announced plans to suspend an additional tariff on US automobiles and also confirmed a reduction on the US auto import charge from 40 percent to 15 percent, though only for 90 days.

With China’s economy slowing, again, on the heels of weaker retail sales and industrial production, policymakers in the United States face a challenging environment as they gather, next week, at Beijing’s annual Economic Work Conference.

Of course, the numbers in Europe do not appear to fare any better.  Shares fell in Europe, as well, with data showing outcomes much weaker than had been originally forecast.  Indeed, the HIS Market Flash Eurozone PMI index fell a shocking 51.7 in December, with the Stoxx 600 index—a matrix which tracks a broad collection of stocks in Europe—fell 0.6 percent.

Looking ahead, then, it might seem that outlook is grim. However, a 0.2 percent overall rise in retail sales this holiday season surpassed the 0.1 percent analysts had expected. Furthermore, the Federal Reserve will soon issue its estimate for industrial production last month, as well as its reading for capacity utilization.  And, not long after that announcement, the United States Department of Commerce will issue its growth in business inventories estimate. Thus we will have a more accurate assessment as the day proceeds.