Stocks fell on Monday as social unrest amid prolonged Covid-19 restrictions in China weighed on markets, sending oil prices lower — Wall Street rose in the week shortened by the Thanksgiving holiday.
The Dow Jones Industrial Average fell 160 points, or 0.5%. The S&P 500 and Nasdaq Composite rose 0.6 percent and 0.4 percent, respectively.
Demonstrations erupted in mainland China over the weekend amid discontent over Beijing’s zero-coronavirus policy. While Beijing tweaked some policies earlier this month to signal the world’s second-largest economy was reopening, local governments tightened their grip on the virus as cases surged.
These developments reverberate across global markets. Oil futures hovered near fresh 2022 lows amid demand concerns.
Shares of companies with large production facilities in the country were under pressure. Apple shares fell 1.5% after Bloomberg reported that unrest at a factory in China could mean production of the iPhone Pro will fall by 6 million units this year.
“You can’t rewire supply chains overnight,” said Mohamed El-Erian, chief economic adviser at Allianz. “So what does that mean for those companies? It means uncertainty about supply.”
The move came after all three major U.S. stock indexes closed higher last week despite shortened trading hours due to the Thanksgiving holiday.
Stocks got a boost this week after Fed officials said the central bank would abandon its aggressive path of rate hikes as inflation cools. Minutes from the Fed’s November meeting confirmed a possible shift in policy.
Investors this week will focus on more earnings reports and a slew of economic data that will provide more information on consumer conditions and the U.S. economy. Personal consumption data and November’s employment report are also due.