US stocks slide after retail sales and factory output plunge
US stocks have opened sharply lower after retail sales fell by the biggest amount on record and manufacturing output plunged.
Wall Street’s S&P 500 index was 2.5 per cent lower shortly after the bell. The Dow Jones was down 2.2 per cent and the Nasdaq was also down 2.2 per cent.
The falls came after the US Commerce Department said retail sales plunged 8.7 per cent in March. This was the biggest drop since records began in 1992.
Official figures also showed that manufacturing output fell at the fastest rate since 1946 last month.
European stocks slumped as investors focused on dire economic forecasts from the International Monetary Fund (IMF).
The UK’s FTSE 100 was down 2.7 per cent and the pan-European Stoxx 600 was 2.5 per cent lower. Germany’s Dax had fallen 3.1 per cent.
Risk-off sentiment has returned to markets after the rally of the last few weeks. Today’s falls have been driven by renewed fears about the economy, sliding oil prices and the start of earnings season.
Dire economic data spooks US stocks
The US retail sales figures are the latest sign that the world’s biggest economy is facing a collapse of a scale not seen since the 1930s.
Clothing sales slumped by more than 50 per cent in March, while restaurant bills shrank by 26.5 per cent and motor vehicle spending fell 25 per cent.
US manufacturing output plunged by the most since 1946 in March, official figures showed today. Output fell 6.3 per cent as coronavirus lockdowns destroyed supply chains.
The IMF yesterday said the US economy will shrink by 5.9 per cent in 2020, although many private sector predictions have been worse.
Craig Erlam, senior market analyst at currency firm Oanda, said: “We’re seeing a little risk now being taken off the table as the economic reality of the situation starts to hit home.”
Investors bought up so-called safe-haven assets as they sold shares. The yield on the US 10-year Treasury bond, which moves inversely to price, fell nine basis points (0.09 percentage points) to 0.663 per cent.
The dollar rose 0.9 per cent on an index against other global currencies as investors sought the safety of the greenback.