Signs China is reining in lending and tempering its economic growth sparked a sell-off in Shanghai that weighed on global stock markets and ultimately pushed the U.S. retail sector down 1.6 percent Monday.
The S&P Retail Index slid 5.80 points to 364.55 as the Dow Jones Industrial Average declined 0.5 percent, or 47.92 points, to 9,496.28.
Bank lending in China for August could fall below the record low of 270 billion yuan, or $39.58 billion, seen a year ago, according to the state-run Xinhua news agency. Chinese banks lent out 7.73 trillion yuan, or $1.13 trillion, through July this year, well ahead of the annual target of 5 trillion yuan.
“It’s basically a signal that they want things to cool off,” said Paul Nolte, director of investments at Hinsdale Associates. “The expectation was that China was going to be the global driver for economic recovery instead of the U.S. They were going to be picking up the slack. If China’s trying to slow their economy, that’s not good for the rest of us.”
The Shanghai Composite Index sank 6.7 percent to 2,667.75 Monday, its sixth-largest decline since January 2000.
U.S. stocks have continued to rise from the depths of the financial crisis as investors anticipate an economic comeback that has yet to begin in earnest. Retail stocks rose 2.8 percent last month and are up 30.5 percent so far this year. Among the retailers losing ground Monday were Abercrombie & Fitch Co., down 4.3 percent to $32.29; Saks Inc., 4.2 percent to $6.10; The Talbots Inc., 3.9 percent to $5.96; Coach Inc., 3.4 percent to $28.29; Tiffany & Co., 3.2 percent to $36.38, and The Wet Seal Inc., 3 percent to $3.51.
“Our market has gotten so far ahead of economic fundamentals…so any ill wind that’s blowing is going to affect the market,” Nolte said. The focus is now on the holiday season, with many projecting a turnaround, and Nolte said stocks could experience a “correction” if retail sales continue to falter.
The other Asian markets held relatively steady on Monday with the Nikkei 225 in Tokyo slipping 0.4 percent and the Hang Seng Index in Hong Kong falling 1.9 percent. The CAC 40 in Paris dipped 1.1 percent while the FTSE 100 in London was closed for a bank holiday.
U.S. joblessness continues to be one of the biggest problems facing retailers and the economy.
Economists expect the U.S. government will report Friday that employers shed another 228,000 jobs last month, on top of the 247,000 positions eliminated in July.
However, The Conference Board said Monday that the number of online job postings rose by 169,000 last month.
“The August increase is good news, showing what we hope will be a continued improvement in job demand this fall,” said Gad Levanon, senior economist at The Conference Board, who also noted consumer confidence is on the rise.
“While all of this is good news, the gap between the number of unemployed and the number of advertised vacancies still remains at about 11 million, with over four unemployed for every online advertised job vacancy,” Levanon said.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews