U.S. stocks fell Friday after China withdrew its 2020 GDP forecast.
All three major U.S. indices were lower, with the S&P 500 down 0.4%. The 10-Year Treasury yield fell to 0.66%. Yields fall when prices rise. Gold, another safe haven asset, rose 0.6%.
Investors continue to favor growth over value stocks, another slightly risk-off sign, as growth stocks can sometimes power through cyclical headwinds. The Vanguard S&P 500 value ETF (VOOV) - Get Report fell 0.45%, with its growth counterpart (VOOG) - Get Report down just 0.3% after having rise 0.5% in premarket trading. Nvidia (NVDA) - Get Report, for instance, rose after earnings Thursday, which showed the work-from-home environment is accelerating demand for the cloud. Nvidia’s Data Center revenue grew 80% year-over-year, helping the chipmaker clear revenue and earnings estimates.
In China, the country said it is withdrawing its 2020 GDP forecast, reflecting just how much it has been impacted by the coronavirus outbreak. Recently, a province near Beijing was locked down due to a spike in virus cases.
As investors in the U.S. and abroad fear a second wave of coronavirus infections as well as the growing distrust between the U.S. and China, markets have had trouble gaining traction of late.
Although the S&P 500 is up 2% for the week, it’s been largely flat for almost a month.
Data from Bank of America’s fund manager survey shows that $5 billion flowed out of cash this week, but $17 billion flowed into bonds and $11 billion moved out of stocks.
These data points underscore that investors, who have built up cash over the past few months, have begun using that cash not to buy risky assets but to put it into safer assets. Government bond yields in the U.S. had spiked at one point this week, making them more attractive against inflation.