NEW YORK (AP) — Stocks worldwide are falling Tuesday as China’s faltering recovery raises worries for the rest of the global economy.

The S&P 500 was 0.4% lower in early trading after data showed a deepening slump in July for the world’s second-largest economy. The Dow Jones Industrial Average was down 170 points, or 0.5%, at 35,137, as of 9:40 a.m. Eastern time, and the Nasdaq composite was 0.2% lower.

Coming into this year, the expectation was that China’s economy would grow enough after the government removed anti-COVID restrictions to prop up a global economy weakened by high inflation. But China’s recovery has faltered so much that it unexpectedly cut a key interest rate on Tuesday and skipped a report on how many of its younger workers are unemployed.

Worries about the knock-on effects for the rest of the global economy are weighing on Wall Street, where stocks have already been retrenching in August. The pullback follows a gangbusters first seven months of the year that critics called overdone.

In the U.S., the economy has so far remained resilient despite much higher interest rates. A report on Tuesday showed growth for sales at U.S. retailers accelerated by more in July than economists expected.

“U.S. retail sales are charging ahead, and a lot of that may be on charge cards,” said Brian Jacobsen, chief economist at Annex Wealth Management. “Still, the U.S. consumer is showing few signs of slowing down.”

Strong spending by U.S. consumers has been helping to keep the economy out of a long-predicted recession. It’s held up as the job market has remained solid, even under the weight of much high interest rates.

The strong retail sales report raises hopes for the U.S. economy, but it could also raise the Federal Reserve’s resolve to keep interest rates high in order to fully grind down inflation. The Fed has already hiked its key interest rate to the highest level in more than two decades, and high rates work by bluntly dragging on the entire economy.

Treasury yields initially rose following the retail sales report, approaching their highest levels since the 2007-09 Great Recession, before easing.

A faltering Chinese economy could mean less demand for oil, commodities and other building blocks.

The price for a barrel of U.S. crude oil fell 1.5% to $81.26. Prices also slipped for Brent crude, the international standard, and for copper.

The declines meant stocks of energy and raw-material producers were among the biggest losers in the S&P 500. Miner Freeport-McMoRan fell 3.6%, and Exxon Mobil’s 1.4% drop was one of the heaviest weights on the index.

Elsewhere on Wall Street, more reports on corporate profits that came in better than expected helped to limit the market’s losses.

Cardinal Health rose 1.5% after reporting stronger profit and revenue for the spring than analysts expected.

Home Depot likewise gained 1% after it topped expectations, though it’s feeling the effects of much higher interest rates. The home improvement retailer said it’s seeing continued pressure on some types of big-ticket projects.

In stock markets abroad, indexes slumped in Europe after falling 1% in Hong Kong and 0.1% in Shanghai.

Pressures are appearing worldwide. Also Tuesday, Russia’s central bank raised its main lending rate in an emergency move to strengthen the ruble after the currency reached its lowest value since early in the war with Ukraine.

Japanese stocks were an exception. The Nikkei 225 rose 0.6% after Japan reported unexpectedly strong growth in its economy during the spring.

In the bond market, the yield on the 10-year Treasury slipped to 4.19% from 4.20% late Monday. It helps set rates for mortgages and other important loans.

The two-year Treasury yield, which more closely follows expectations for the Fed, fell to 4.94% from 4.97%.

___

AP Business Writers Joe McDonald and Matt Ott contributed to this report.