U.S. Stocks Close Mostly Lower Amid Worries About China Covid Surge

U.S. Stocks Close Mostly Lower Amid Worries About China Covid Surge

November 28, 2022

After ending last Friday’s choppy session mostly higher, stocks moved back to the downside during trading on Monday. The tech-heavy Nasdaq showed a particularly steep drop after ending the preceding session little changed.

The major averages all finished the day in negative territory, although the Dow posted a relatively modest loss, edging down 45.41 points or 0.1 percent to 33,700.28. The Nasdaq tumbled 121.55 points or 1.1 percent at 11,024.51 and the S&P 500 slid 15.40 points or 0.4 percent to3,949.94.

Concerns about the outlook for the global economy contributed to the weakness on Wall Street amid a surge in new Covid cases in China.

China reported the death of three people after contracting Covid, marking the first Covid-related deaths that China’s mainland has reported since May.

The surge in new cases had led China to impose stringent restrictions in cities like Beijing and Shanghai, shattering recent hopes the country would soon ease Covid curbs.

“Stocks are lower as the global growth picture takes a hit following key China Covid lockdowns and as the US economy could have to deal with a massive rail worker strike before the holidays,” said Edward Moya, senior market analyst at OANDA.

He added, “Adding to the risk aversion tone are rising concerns that future Russian attacks on Ukraine’s nuclear power supply could be catastrophic.

Trading activity was relatively subdued, however, with some traders likely looking to get a head start on the upcoming Thanksgiving Day holiday.”

A lack of major U.S. economic data also kept some traders on the sidelines, although reports on durable goods orders and new home sales are likely to attract attention on Wednesday along with the minutes of the latest Federal Reserve meeting.

Sector News

Energy stocks regained ground after an early sell-off but still ended the considerably lower, with the Philadelphia Oil Service Index tumbling by 2.3 percent and the NYSE Arca Oil Index falling by 1.5 percent.

The weakness among energy stocks came as the price of crude oil for December recovered after plunging to a ten-month low but still closed down $0.35 at $79.73 a barrel.

Computer hardware and semiconductor stocks also saw significant weakness on the day, contributing to the steep drop by the Nasdaq.

Housing and biotechnology stocks also moved to the downside, while some strength was visible among steel and utilities stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Monday. China’s Shanghai Composite Index fell by 0.4 percent and Hong Kong’s Hang Seng Index tumbled by 1.9 percent, although Japan’s Nikkei 225 Index bucked the downtrend and edged up by 0.2 percent.

The major European markets also moved to the downside on the day. While the U.K.’s FTSE 100 Index edged down by 0.1 percent, the French CAC 40 Index dipped by 0.2 percent and the German DAX Index slid by 0.4 percent.

In the bond market, treasuries showed a lack of direction after failing to sustain an early upward move, closing roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 3.825 percent.

Looking Ahead

Trading activity is likely to remain somewhat subdued on Tuesday amid another quiet day on the U.S. economic front.

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