US stocks have slumped following worrying news out of China that its exports in September had fallen 10% year-on-year, marking the sharpest drop since February. Chinese imports also fell 1.9% in September, after rising 1.5% in August. The steep decline in exports was greater than forecast, intensifying long-standing concerns about the slowing growth of the world’s second-largest economy and reflecting weak global demand for goods, which, in turn, bodes ill for global economic growth.
“Weaker-than-expected Chinese trade readings have increased concerns that the pace of global growth will slow further,” said Dennis DeBusschere, a macro research analyst at Evercore ISI, to the Wall Street Journal.
The Dow Jones Industrial Average fell 45.26 points, or 0.25%, to 18098.94 points. The S&P 500 dropped 0.3%, or 6.63 points, to 2132.55, while the Nasdaq Composite Index fell 0.5%, or 25.69, to 5213.33.
Traders sought refuge in government bonds, the yen, and gold, as Treasuries rebounded from a four-month low. The yield on benchmark 10-year Treasuries fell 3 basis points, or 0.03%, to 1.739%, reflecting higher demand. According to Bloomberg, the US Treasury sold $12 billion of 30-year debt on Thursday. Conversely, raw materials and energy stocks fell out in anticipation of weakening demand.
The weak data coming out of China has precipitated some doubts as to whether the Fed will indeed raise interest rates by its December meeting, though the market-implied probability rate of such an eventuality is still 66%. The consensus among traders and investors is that the Fed will proceed with raising the interest rate, despite the news.
“It’s going to take some pretty lousy data to persuade the Fed to not raise rates,” said Art Hogan, of Wunderlich Securities to Bloomberg. “The Fed’s letting us know that December is something they have to be talked out of, not into.”