Wall Street indices retreated Friday as a historic strike in the U.S. auto sector dampened the mood after forecast-busting Chinese economic data sent Asian and European stock markets higher.
The Dow Jones Industrial Average was down 0.5 percent while the S&P 500 fell 0.8 percent and the tech-heavy Nasdaq slipped 1.3 percent in late morning deals.
In an unprecedented move, the United Auto Workers' union launched simultaneous strikes just after midnight at three factories of the "Big Three" car manufacturers.
The stoppages were decided after contract negotiations with General Motors, Ford and Jeep-owner Stellantis failed to produce an agreement on wage hikes before a union deadline.
- Critical sector -
"This is not a surprise to the market given the tenor of remarks leading up to the deadline, but that doesn't mean it is a good thing for the economy," Patrick O'Hare, market analyst at Briefing.com, said.
"It will become less of a good thing the longer it persists given the reach and importance of auto manufacturing supply chains," he added.
The strike involves 12,700 workers but the 150,000-strong union warned that the industrial action could spread if its demands are not met.
President Joe Biden, who has sought to lock up support from organised labor for his re-election effort, called union leaders on Thursday and was due to make public remarks on the labor strife on Friday.
Investors are also gearing up for the U.S. Federal Reserve's latest interest rate decision on Wednesday after the European Central Bank signalled this week that its own rate-hike campaign may be over.
Data on Friday showed U.S. industrial production kept expanding in August, beating expectations even though the pace of the increase slowed due to sluggish manufacturing growth.
The figures will give the Fed additional information as it weighs another hike to its key lending rate to cool above-target inflation.
However, traders and analysts expect the U.S. central bank to announce it is holding rates steady to give policymakers more time to assess the health of the world's largest economy.
- 'Upbeat mood' -
Sentiment was more positive among traders in Asia and Europe after data showed Chinese retail sales and industrial production jumped more than expected last month.
The figures were the latest suggesting the economy could be stabilizing after months of sluggishness, with inflation, trade and services all showing a marked improvement in recent weeks.
The Paris CAC 40 index led the way in Europe but it pared back some gains after Wall Street opened lower, finishing the day just under one percent higher.
Tokyo closed up more than one percent, helped by a rally in tech investor SoftBank that came after the firm's chip design unit Arm soared 25 percent on its trading debut in New York a day earlier.
Equities were "building on strong gains in yesterday's session after the European Central Bank signalled its hiking cycle is over," said Neil Wilson, chief market analyst at Finalto.
The ECB gave a strong hint it may be done with the monetary tightening campaign on Thursday after pushing rates to their highest level since the introduction of the euro in 1999.
The Chinese data also "helped secure the upbeat mood," Wilson said.