US open: Stocks open lower as Chinese economic data spooks investors
US stocks slid at the open on Tuesday as investors continued to monitor any developments in Sino-US trade relations and after China downgraded its economic growth targets for this year.
At 1530 GMT, the Dow Jones Industrial Average was down 0.16% at 25,777.68, while the S&P 500 traded 0.18% lower to 2,787.87 and the Nasdaq was 0.17% weaker at 7,564.39.
The Dow opened more than 40 points lower on Tuesday following news from Beijing overnight that it now expects the economy to grow at a pace of between 6% and 6.5% this year, down from about 6.5% growth in 2018, as a result of the trade war with the US, high debt levels and financing bottlenecks for private enterprises.
The Caixin/Markit services purchasing managers' index fell to 51.1 in February from 53.6 the month before, dropping to its lowest level in four months and coming in well below the consensus forecast of 53.5. A reading above 50 indicates expansion while a reading below signals contraction.
The data showed that new export orders were at their weakest level in five months.
In addition to the GDP target cut, the budget deficit target was expanded to 2.8% of GDP from 2.6% last year and the local government special bond quota was lifted sharply to 2.15 trillion yuan from 1.9 trillion last year. China's CPI inflation target was left at 3%.
Chinese Premier Li Keqiang told delegates at the National People's Congress of China that to boost growth, the country would aim to deliver nearly 2 trillion yuan ($298bn or £227bn) of tax cuts.
On Monday, US Secretary of State Mike Pompeo said the US and China were "on the cusp" of agreeing on a deal to end the trade war. In a series of interviews with Iowa radio and television stations, Pompeo said he hoped a deal could be struck in coming weeks.
In US corporate news, shares in Target were up 3.63% in early trade after the retailer's fourth-quarter earnings and sales impressed.
Department store chain Kohl's gained 5.27% at the open after it a posted better-than-expected quarterly profit, while cloud-based software company Salesforce saw its shares drop 1.15% at the bell as its first-quarter profit missed expectations.
On the macroeconomic front, business activity growth accelerated to a seven-month high in February, according to a new report from IHS Markit.
The seasonally adjusted final IHS Markit US Services Business Activity Index registered 56.0 in February, up from 54.2 in January and broadly in line with the earlier released "flash" figure of 56.2.
The rise in output was supported by a sharp increase in new business and a return to growth in new export orders. Moreover, foreign demand rose at the strongest rate since last May.
Elsewhere, the Institute for Supply Management's non-manufacturing PMI came to 59.7% in February, a 3% improvement on the January reading of 56.7%.
"This represents continued growth in the non-manufacturing sector, at a faster rate," the ISM said.
The non-manufacturing business activity index increased five points to 64.7, reflecting growth for the 115th consecutive month, while the new order index jumped 7.5% to 65.2%.
The prices index dropped 5% to 59.5%, indicating that prices increased in February for the 21st consecutive month, and the employment index dipped 2.6 percentage points to 55.2%.
Lastly, sales of new US single-family homes hit a seven-month high in December, according to the Commerce Department.
New home sales rose 3.7% to a seasonally adjusted annual rate of 621,000, the highest level since May 2018. However, December's sales pace was revised down to 599,000 from its previous reading of 657,000 units, pointing to continued weakness in the housing market.
Economists had pencilled in a reading of around 600,000.