Wall Street’s main indexes began the week on a dull note on Monday due to curbs in China and losses in energy stocks following a report of a likely increase in oil output, while gains in Disney helped ease the pressure on the Dow.
The S&P 500 energy sector index tumbled 4% to its lowest level in four weeks as oil prices slid more than 5% after the Wall Street Journal reported Saudi Arabia and other OPEC oil producers are discussing an output increase.
Global markets were also spooked by a surge in COVID cases in China as the world’s second largest economy shut businesses and schools in hard-hit districts and tightening rules for entering the city as infections ticked higher.
“You’ve got a real concern about the Chinese economy’s drag on U.S. economic activity,” said Hugh Johnson, chief economist of Hugh Johnson Economics in Albany, New York.
U.S. casino operators with businesses in China including Wynn Resorts Ltd, Las Vegas Sands Corp, MGM Resorts International and Melco Resorts & Entertainment Ltd slipped between 3.3% and 8.1%.
Travel stocks including American Airlines Group Inc and Norwegian Cruise Line Holdings Ltd fell 0.5% and 1.6%, respectively.
Oil prices hit 10-month low on OPEC+ production boost report
Still, keeping declines on the Dow on check was a 6.9% jump in Walt Disney Co after Bob Iger’s return as chief executive to the entertainment giant.
At 10:20 a.m. ET, the Dow Jones Industrial Average was down 32.02 points, or 0.09%, at 33,713.67, the S&P 500 was down 14.78 points, or 0.37%, at 3,950.56, and the Nasdaq Composite was down 71.08 points, or 0.64%, at 11,074.99.
Only seven of the 11 major S&P 500 sector indexes eked out gains in the first hour of trading.
Focus is also on the release of minutes from the U.S. Federal Reserve’s November meeting on Wednesday after some officials reiterated the central bank’s pledge to raise rates until inflation was in check.
Fed’s Boston chief Susan Collins said on Friday the central bank may need to deliver another 75-basis point rate hike as it seeks to get inflation under control.
While traders are widely betting on a 50-basis point hike in the December meeting, some see 24.2% odds of a 75-bps hike, according to CME Group’s FedWatch tool.
Gay dating app Grindr lost 20.5%, after skyrocketing in its debut on the New York Stock Exchange in the previous session.
Trading volumes are likely to be thin this week as markets will be closed on Thursday for Thanksgiving and will be open for half day on Friday.
Declining issues outnumbered advancers for a 1.39-to-1 ratio on the NYSE and for a 1.54-to-1 ratio on the Nasdaq.
The S&P index recorded seven new 52-week highs and one new lows, while the Nasdaq recorded 57 new highs and 106 new lows.