The Dow Jones Industrial Average fell Monday, continuing an April market sell-off that has pushed the index lower for four straight weeks.
Fear about a global economic slowdown loomed as Asian stock markets cratered Monday amid concerns about Covid case spikes in China. Oil prices declined and yields retreated on the fears.
Wall Street is also bracing for a stacked week of earnings, including reports from major technology companies like Amazon and Apple.
The Dow fell about 220 points, or 0.7%. The S&P 500 retreated 0.9%. The Nasdaq Composite was near flat.
“When investors look around in the current environment, they just don’t like what they see. They see slower growth in China … and they see a Fed that is getting increasingly hawkish and looking to raise rates aggressively,” J.P. Morgan Asset Management’s David Lebovitz told CNBC’s “Squawk on the Street” on Monday.
“These crosscurrents are just causing a lot of uncertainty and that’s why markets are under so much pressure,” Lebovitz added.
The Dow is coming off its worst one-day performance since October 2020 on Friday, dropping more than 900 points and marking the Dow’s fourth straight weekly loss. The S&P 500 and the Nasdaq are fresh off three straight losing weeks.
After a late March comeback, stocks returned to their losing ways in April. The Nasdaq Composite is down about 10% for the month, while the S&P 500 and Dow are off by around 6% and 3% respectively. The S&P 500 is back in correction territory, down roughly 12% from its high. The Nasdaq is off by more than 20% from its record.
China’s Shanghai composite dropped more than 5% on Monday as the country struggles to contain a Covid breakout in its largest city. Beijing reported a spike in cases over the weekend.
Fears of a global slowdown sent oil prices lower. WTI crude fell more than 6%, back below $100.
Energy shares retreated, comprising the worst-performing S&P 500 sector Monday. Chevron fell more than 4% and was the biggest decliner on the Dow. Exxon Mobil lost more than 6%.
The 10-year Treasury yield, which has undergone a rapid rise this year that has worried investors, dropped more than 10 basis points to below 2.8% (1 basis point equals 0.01%).
Financial stocks struggled, also among the S&P 500’s hardest-hit sectors Monday, amid recession fears. Bank of America and Wells Fargo each retreated around 3%.
Some tech shares were a bright spot, rising as interest rates fell. Microsoft and Google parent Alphabet both rose more than 1%
Investors are watching Twitter as well, which reportedly is re-examining Elon Musk’s takeover bid. The social media company is nearing a deal to sell itself to the billionaire investor, The New York Times reported, citing unnamed sources. Twitter shares were roughly 4% higher.
Meanwhile, Coca-Cola shares were marginally higher after the company reported better-than-expected quarterly earnings before the bell Monday.
About 160 companies in the S&P 500 are expected to report earnings this week, and all eyes will be on reports from mega-cap tech names, including Amazon, Apple, Alphabet, Meta Platforms and Microsoft.
“This week may easily be a fork in the road of equities. We have nearly a third of the S&P 500 and half of the Dow Jones set to report. Bottom-up drivers will either confirm or reject what the challenging macro backdrop has given us over the last three weeks,” MKM’s JC O’Hara said in a note.
