U.S. economic growth is expected to have slowed in the third quarter of 2019, according to the Atlanta Federal Reserve's GDP tracking gauge.
The GDPNow model estimates the economy grew by just 1.8% in the third quarter. That is down from a previous reading of 2.1% and below the second quarter's final figure of 2%.
The downgrade came after the release of dismal U.S. manufacturing data earlier in the day, which sent stocks tumbling. The Institute for Supply Management said U.S. manufacturing activity contracted last month to its lowest level in more than 10 years.
"The disappointing data is only fanning long-standing fears of slowing global growth," said Alec Young, managing director of global markets research at FTSE Russell. "And with U.S.-China trade expected to produce little in the way of near-term breakthroughs, investors continue to favor countercyclical, defensive stocks with high dividend yields as weak data pushes interest rates ever lower."
Chinese and U.S. negotiators are expected to meet next week in an effort to bring the ongoing trade war closer to its end. Both countries have slapped tariffs on billions of dollars worth of their goods since last year, causing repeated bouts of volatility in capital markets.
Goldman Sachs also cut its outlook for Q3 GDP, reducing its estimate by 0.1 percentage points to 2%.