Stocks fell Monday as social unrest from China’s prolonged Covid restrictions weighed on markets, sending oil prices lower — after Wall Street notched gains during the Thanksgiving holiday-shortened week.
The Dow Jones Industrial Average fell more than 60 points, or 0.2%. The 30-stock average briefly tumbled more than 100 points at the open. The S&P 500 and Nasdaq Composite 0.4% and 0.3%, respectively.
Over the weekend, demonstrations broke out in mainland China as people vented their frustrations with Beijing’s zero-Covid policy. Local governments tightened Covid controls as cases surged, even though earlier this month Beijing adjusted some policies that suggested the world’s second-biggest economy was on its way to reopening.
The developments reverberated across global markets. with oil futures hovering around new 2022 lows around demand concerns.
Shares of companies with large production facilities in the country were under pressure. Apple lost 1.5% after Bloomberg reported that unrest at a factory in China could mean 6 million fewer iPhone Pro units for the year.
“You cannot rewire supply chain overnight,” said Mohamed El-Erian, chief economic advisor at Allianz. “So what does it mean for those companies? It means supply uncertainty.”
The moves come after all three major US indexes ended last week higher, even with the shortened trading time due to the Thanksgiving holiday.
Stocks were lifted during the week by comments from Federal Reserve officials indicating that the central bank would step down its aggressive rate hike path as inflation cools. Minutes from the Fed’s November meeting confirmed the likely shift in policy.
Investors will be watching this week more earnings reports and a slew of economic releases that will give further information on the state of the consumer and the US economy. Personal consumption data and the labor report for November will also be released.