Wall Street eyes subdued open as global growth fears intensify


(Reuters) – The S&P 500 and the Dow Jones Industrial Average looked set to retreat from record levels on Thursday, as weak data from major economies and a dour forecast from Cisco rekindled fears of a global slowdown.

Cisco Systems Inc (CSCO.O) fell 5.9% after the network gear maker said current-quarter revenue would fall 3% to 5% amid declining global spending on its routers and switches, some of which are made in China.

A prolonged U.S.-China trade war has disrupted supply chains and hit economic growth around the world. Fresh data from the Labor Department on Thursday showed producer prices increased by the most in six months in October.

The data follows fairly upbeat signals about the economy, including better-than-expected job growth in October and an acceleration in services sector activity.

“The U.S. economy continues to do well and it does appear the slow path may be coming to an end, but you are still growing close to 2%, which is not excessively strong,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“However, it’s better than what we are seeing in other parts of the world, like the eurozone in particular.”

Data on Thursday showed China’s factory output growth slowed significantly more than expected in October and Germany barely avoided a recession, while Japan’s economy ground to a near standstill.

Hopes of a resolution to the dispute spurred Wall Street to record highs this month, but President Donald Trump recently tempered expectations with the threat of more tariffs if China failed to reach a deal.

China said on Thursday the two sides were holding “in-depth” trade discussions, and cancelling tariffs was an important condition to reaching a deal.

All eyes are on Federal Reserve Chair Jerome Powell’s testimony before the House Budget Committee on Thursday after his comments about a “sustained expansion” ahead for the U.S. economy supported stock markets in the previous session.

A fairly better-than-expected corporate earnings season has also contributed to the stocks rally, with the benchmark S&P 500 index on course for its sixth straight weekly increase.

At 8:46 a.m. ET, Dow e-minis 1YMcv1 were down 55 points, or 0.2%. S&P 500 e-minis EScv1 were down 7.25 points, or 0.23% and Nasdaq 100 e-minis NQcv1 were down 23.5 points, or 0.28%.

Walmart Inc (WMT.N) rose 1.9% as the world’s biggest retailer reported better-than-expected third-quarter U.S. comparable sales on higher spending at its stores and website and raised its annual earnings outlook.

Viacom Inc (VIAB.O) gained 2.9% after the MTV-owner topped quarterly profit estimates, helped by a rise in domestic advertising revenue.

But Kraft Heinz Co (KHC.O) dropped 2% after a report that Goldman Sachs had downgraded the food and beverage maker’s stock to “sell”.

Reporting by Arjun Panchadar and Agamoni Ghosh in Bengaluru; Editing by Saumyadeb Chakrabarty