Stocks are stuck in reverse
Stocks racked up more losses on Wall Street on Monday, leaving the Standard & Poor’s 500 at its lowest point in more than a year.
The sell-off came as renewed worries about China’s economy piled on top of global financial markets already battered by rising interest rates.
The S&P 500 tumbled 3.2%, deepening its losses after five straight down weeks, its longest such streak in more than a decade.
The Dow Jones industrial average fell 2% and the Nasdaq composite pulled back 4.3% as tech stocks again took the brunt of the selling. Monday’s sharp drop leaves the S&P 500, Wall Street’s main measure of health, down 16.8% from its record set early this year.
Wall Street’s pullback followed a worldwide swoon for markets. Stocks fell across Europe and much of Asia as did assets including oldeconomy crude oil and neweconomy Bitcoin. Bond yields and the price of gold also fell.
Among U.S. stocks, the energy sector, a star performer in recent weeks, accounted for some of the sharpest declines as oil and gas prices fell. Marathon Oil and APA each sank more than 14%.
“Basically, investors are finding it very difficult to find a place to hide,” said Sam Stovall, chief investment strategist at CFRA. “The traditional safe havens, such as defensive sectors or such as bonds, are not doing that well. Commodities are not doing well.”
The S&P 500 fell 132.10 points to 3,991.24. The Dow dropped 653.67 points to close at 32,245.70. The Nasdaq slid 521.41 points to 11,623.25.
Smaller-company stocks also fell broadly. The Russell 2000 gave up 77.48 points, or 4.2%, to end at 1,762.08.
Bitcoin dropped 9.7% on Monday, according to Coindesk. It has tumbled about 29% since the start of April.
Worries about the world’s second-largest economy added to the gloom Monday. Analysts cited comments over the weekend by a Chinese official warning of a grave situation for jobs, as the country hopes to halt the spread of COVID-19.
Authorities in Shanghai have again tightened restrictions just as the city was emerging from a month of strict lockdown after an outbreak.
The fear is that China’s strict anti-COVID policies will add more disruptions to trade and supply chains, while dragging on its economy, which for years was a main driver of global growth.
In the past, Wall Street has endured similar pressures because of the strong profit growth that companies were producing.
But this earnings reporting season has yielded less enthusiasm. Companies overall are reporting larger profits than expected, as is usually the case. But discouraging signs for future growth have been plentiful.
The number of companies citing “weak demand” in their conference calls jumped to the highest level since the second quarter of 2020, strategist Savita Subramanian wrote in a BofA Global Research report. Tech earnings are also lagging, she said.
Higher interest rates are hitting tech stocks particularly hard. The Nasdaq’s loss of 25.7% so far this year is much sharper than that for other indexes.
Electric vehicle maker Rivian Automotive slumped 20.9% on Monday as restrictions expire that prevented some big investors from selling their shares after its stock market debut six months ago. The company has lost more than threequarters of its value so far this year.
The yield on the 10-year Treasury has shot to its highest level since 2018 as inflation and expectations for Fed action rose. It moderated Monday, dipping to 3.03% from 3.12% late Friday. But it’s still more than double where it started the year.
Oil prices fell, weighing down energy stocks. Benchmark U.S. crude fell 6.1% to $103.09 a barrel, though it’s still up about 40% this year. Brent crude, the international standard, fell 5.7% to $105.94 a barrel.