China worries spur plunge by stock markets worldwide
Stocks racked up more losses on Wall Street on Monday, leaving the S&P 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 gave up 3.2%, adding to its losses following its fifth straight weekly loss, its longest such streak in more than a decade.
The Dow Jones Industrial Average fell 2% and the Nasdaq pulled back 4.3% as tech-oriented stocks again took the brunt of the selloff. 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.
The sell-off on Wall Street followed a worldwide swoon for markets. Not only did stocks fall across Europe and much of Asia, but so did everything from old-economy crude oil to new-economy 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 energy prices fell. Marathon Oil and APA Corp. 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 to 3,991.24. The Dow dropped 653.67 points to 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 1,762.08.
Most of this year's damage has been the result of the Federal Reserve's aggressive flip away from doing everything it can to prop up financial markets and the economy. The central bank has already pulled its key shortterm interest rate off its record low of near zero, where it sat for nearly all the pandemic. Last week, it signaled additional increases of double the usual amount may hit in upcoming months, in hopes of stamping out the high inflation sweeping the economy.
Bitcoin has tumbled 29% since April's start. It dropped 9.7% Monday, according to Coindesk. 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, amid citizen complaints that it feels endless, 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 worldwide 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 been able to remain steady despite similar pressures because of the strong profit growth that companies were producing.
But this most recent earnings reporting season for big U.S. companies has yielded less enthusiasm. Companies overall are reporting bigger profits for the latest quarter than expected, as is usually the case. But discouraging signs for future growth have been plentiful.
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 settle at $103.09 per barrel, though it's still up about 40% this year. Brent crude, the international standard, fell 5.7% to settle at $105.94 a barrel.