US Stocks: US stocks end lower on banking concerns, weak China data

NEW YORK: US stocks closed lower Tuesday, pulled down by fresh concerns over the US banking sector, stronger than expected economic data and worries over the health of the Chinese economy.

Major US banks including JPMorgan Chase, Wells Fargo and Bank of America ended the day down by more than two percent after an analyst at ratings agency Fitch warned of the risks of a downgrade on the American banking industry.
A downgrade “would recalibrate all our financial measures and would probably translate into negative rating actions” for banks, Fitch analyst Chris Wolfe told CNBC.

The Dow Jones Industrial Average fell more than 300 points to close 1.0 percent lower at 34,946.39, while the broad-based S&P 500 dropped 1.2 percent to 4,437.86.
And the tech-rich Nasdaq Composite Index declined by 1.1 percent to 13,631.05.
“Bank ratings can’t be higher than the industry’s rating,” Interactive Brokers’ senior economist Jose Torres wrote in a note to clients.
Downgrading the industry “would then require Fitch to evaluate other banks and potentially lower credit ratings for numerous financial institutions,” he added.
Meanwhile, stronger than expected retail sales data in the United States added to concerns that the Federal Reserve could keep interest rates higher for longer.
In China, disappointing data from July showed slowing retail spending and industrial production growth, as the central bank announced a series of surprise rate cuts in a bid to bolster the world’s second-largest economy.
Amid the gloomy run of economic news, Beijing also announced it would stop publishing numbers on its rising youth unemployment rate, depriving economists and investors of an important data point.
Among individual companies, Home Depot shares rose 0.7 percent as it reported better profits than anticipated.