U.S. stocks ended mostly lower on Monday after markets lost steam as investors braced for quarterly earnings from some big companies and another round of inflation reading that is likely to remain hot. All the three major indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.5% or 164.31 points to end at 31,173.84 points, after entering positive territory for a short span in the afternoon. This was the blue-chip index’s biggest decline since Jun 30.
The S&P 500 slid 1.2% or 44.95 points to finish at 3,854.43 points. This was also the biggest decline for the index since Jun 28. Energy stocks were the worst performers. Communication services and consumer discretionary stocks were the biggest losers.
The Communication Services Select Sector SPDR (XLC) declined 3%, while the Consumer Discretionary Select Sector SPDR (XLY) fell 2.7%. The Technology Select Sector SPDR (XLK) lost 1.4%. Nine of the 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq declined 2.3% or 262.71 points to close at 11,372.60 points. The index recorded its worst single-day loss since Jun 28.
The fear-gauge CBOE Volatility Index (VIX) was up 6.21% to 26.17. Decliners outnumbered advancers on the NYSE by a 2.41-to-1 ratio. On Nasdaq, a 2.81-to-1 ratio favored declining issues. A total of 9.33 billion shares were traded on Monday, lower than the last 20-session average of 12.92 billion.
Inflation, Recession Fears Grip Markets Again
Wall Street ended on a high last week after performing well over the past few days. Surging inflation and the Fed’s aggressive rate-hike policy that could slow economic growth were already existing concerns that were taking a toll on stock.
Markets ended higher on Friday after some impressive jobs data but the inflation and recession fears came back haunting again on Monday. Investors are also bracing for another hot inflation reading that is scheduled to come out this week. June’s headline year-over-year inflation rate is expected to come in higher than May’s reading, which is likely to give the Fed another chance to go for a steep rate hike.
This has been keeping investors worried as this could lead to a massive economic slowdown. Also, investors are looking forward to the earnings season that kicks off this week. A spate of big companies is slated to report earnings this week. However, investors are now not concerned about how revenues the companies report but more about their future business outlook.
This will determine the state of the economy in the coming months. This has been weighing heavy on investors’ sentiment that led stocks to slide once again on Monday.
Consumer discretionary stocks were one of the biggest losers. Shares of Royal Caribbean Cruises Ltd.
RCL
fell 5.4%, while Norwegian Cruise Line Holdings Ltd.
NCLH
declined 4.9%.
Technology stocks also took a beating, with shares of Amazon.com, Inc.
AMZN
declining 3.3%. Amazon each carries a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Shares of Alphabet Inc.
GOOGL
and Apple Inc.
AAPL
declined 3.1% and 1.5%, respectively.
Rising COVID-19 Cases Worry Investors
Investors have lately been worrying about the rising COVID-19 cases in China and the resultant lockdown. The country imposed strict restrictions across a number of cities where fresh cases of the highly contagious BA.5 omicron sub-variant are on the rise.
China accounts for more than 25% of global manufacturing and a shutdown will disrupt the supply chain once again globally. It’s not only in China but fresh cases of COVID-19 are surging across the globe, which is worrying investors and taking a toll on stocks.
No economic data was released on Monday.
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