Stocks fell on Monday as social unrest from China’s prolonged Covid restrictions weighed on markets, sending oil prices lower – After Wall Street made gains during the Thanksgiving holiday week.
The Dow Jones Industrial Average fell 171 points, or 0.5%. The S&P 500 and Nasdaq Composite lost 0.7% and 0.8%, respectively.
Over the weekend, demonstrations erupted in mainland China as people expressed frustration with Beijing’s anti-Covid policy. Local governments have tightened Covid controls as cases mount, although earlier this month Beijing amended some policies that indicated the world’s second-largest economy was on its way to reopening.
The developments reverberated across global markets. With oil futures hovering around fresh 2022 lows on demand concerns.
Shares of companies with large production facilities in the country came under pressure. Apple lost 1.5% after Bloomberg reported that disruptions at a factory in China could mean 6 million fewer iPhone Pro units for this year.
“You can’t reconnect the supply chain overnight,” said Mohamed El-Erian, chief economic advisor at Allianz. “What does that mean for those companies? It means uncertainty about supply.”
The moves come after the three major indices in the US ended last week on a higher note, even as trading time was shortened due to the Thanksgiving holiday.
Stocks rose for the week on comments from Federal Reserve officials that suggested the central bank will abandon its aggressive path to raise interest rates as inflation slows. The minutes of the November Fed meeting confirmed the potential policy shift.
This week, investors will be watching for more earnings reports and a series of economic releases that will provide more information on the state of the consumer and the US economy. Personal consumption data and employment report for November will also be released.