U.S. stock indexes retreated Wednesday morning amid weaker-than-expected data on April retail sales, with investors’ reaction amplified by concerns about the state of U.S.-China tariff relations.

What are major indexes doing?

The Dow Jones Industrial Average DJIA, -0.60%   lost 160 points, or 0.6%, at 25,369, while the S&P 500 index SPX, -0.43%  declined 13 points, or 0.5%, to 2,821. The Nasdaq Composite index NQM9, -0.38%  was off 24 points to 7,711, a fall of 0.3%.

On Tuesday, the Dow finished 207.06 points higher, a gain of 0.8%, at 25,532.05, while the S&P 500 SPX, -0.43%  rose 22.54 points, or 0.8%, to 2,834.41. The Nasdaq Composite COMP, -0.11%  advanced 87.47 points, or 1.1%, to close at 7,734.49.

What’s driving the market?

Disappointing data on U.S. retail sales have helped to reinforce jitters about slowing domestic growth, amid fears over the frayed relationship between Beijing and Washington that escalated last week after the Trump administration allowed tariffs on $200 billion of Chinese goods to increase to 25% from 10% and prepared further duties on a range of other goods.

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Retail sales figures for April showed that U.S. retailers are seeing decelerating purchases for a second time in three months, declining 0.2% last month, compared with expectations for a 0.1% increase, per a MarketWatch poll of economists. Excluding autos, retail sales were flat for the month, versus expectations for 0.7% growth.

Though the letup follows a surprisingly strong 1.7% surge in retail sales in March, the broader trend in consumer spending reflects a slowing economy, despite a health labor market.

President Donald Trump on Tuesday appeared to soften his rhetoric around trade, calling the dispute a “squabble” and repeating expectations for a positive meeting with Chinese leader Xi Jinping next month in Japan.

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Meanwhile, China’s economic activity cooled last month, with data released Wednesday showing a slowing in factory production, investment and retail sales.

Which stocks are in focus?

Shares of Macy’s Inc. M, -0.09% rose 1.6%, after the retailer beat analyst estimates for first-quarter profits, but reported falling revenue that was shy of expectations.

Alibaba Group Holding Ltd. BABA, +0.27% stock rose 0.4%, after the China-based e-commerce giant reported fiscal fourth-quarter earnings and revenue that rose above expectations.

What are analysts saying?

“The 0.2% m/m decline in retail sales in April was weaker than the consensus expectation of a small gain and supports our view that GDP growth is set to slow in the second quarter,” wrote Andrew Hunter, senior US economist with Capital Economics, in a research note.

“With Donald Trump playing down trade tensions between the United States and China as a ‘little squabble,’ there is cautious optimism that both sides will eventually reach a trade deal, with investors potentially looking at the G-20 meeting in Japan next month as a possible target for a breakthrough in trade relations,” said Han Tan, market analyst at FXTM, in a note.

What else is on the economic calendar?

The Empire State manufacturing survey in May climbed to a six-month high of 17.8 from a reading of 10.1 in April, the New York Fed announced Wednesday.

Industrial production, meanwhile, fell 0.5% in April, while capacity utilization fell to 77.9% from an upwardly revised 78.8% in March.Economists polled by MarketWatch expected a 0.1% drop for production and a decline in utilization fell to 78.6%.

At 10 a.m. Eastern Time, March data on business inventories and the National Association of Home Builders May index are set to hit the tape.

Randal Quarles, the Fed’s vice chair for supervision, is due to testify before Congress at 9:30 a.m.

How are other markets faring?

Asian markets closed mostly higher on Wednesday, as Japan’s Nikkei 225 NIK, +0.58% rose 0.6%, Hong Kong’s Hang Seng Index HSI, +0.52% added 0.5%, while the Shanghai Composite SHCOMP, +1.91% advanced 1.9%. In Europe, stocks were mostly under pressure, as reflected by a 0.3% decline for the Stoxx Europe 600 SXXP, -0.47%

Crude oil CLM9, -0.66% prices were on the retreat, down 1.2%, while the price of gold GCM9, +0.32% advanced 0.2%. The U.S. dollar DXY, +0.16% meanwhile, was flat.