S&P 500, Nasdaq book 3-day losing streak as investors gauge China zero-COVID policies and await Powell speech, jobs data
By Isabel Wang and Andrew Keshner
U.S. stocks finished a volatile session mostly lower on Tuesday as investors gauged the chances that China may ease its zero-COVID policies which provoked widespread protests over the weekend and added to investor worries about global economic growth.
Wall Street also weighed downbeat data on U.S. consumer confidence and the housing market, while looking ahead to Fed Chair Jerome Powell's speech Wednesday and the monthly employment report on Friday.
How stocks traded
On Monday, the Dow Jones Industrial Average fell 498 points, or 1.45%, to 33,849, the S&P 500 declined 62 points, or 1.54%, to 3,964, and the Nasdaq Composite dropped 177 points, or 1.58%, to 11,050.
What drove markets
Equities, bond yields and industrial commodity prices fell at the start of the week on concerns a wave of anti COVID-lockdown demonstrations would cause a crackdown by Beijing, further hobbling activity in the world's second biggest economy and slowing global growth.
However, on Tuesday China's National Health Commission said it would ramp up COVID vaccinations for the elderly, a move that is seen allowing the government eventually to relax COVID restrictions.
See: Some markets cheer as China vows to vaccinate more elderly. Analysts see positive movement by officials
"Police in China have quashed mass COVID demonstrations for now, helping stocks regain their footing," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
However, Mark Williams, chief Asia economist at Capital Economics, worries it will take much longer time for the new campaign of getting elderly vaccinated to succeed, because the vaccination rate is still low.
"Investors in particular are really eager for this kind of good news to happen, that there's going to be opening up and they're seizing onto every morsel of good news on that front, but I think it's gonna be a longer process," said Williams in a briefing on Tuesday.
The Hang Seng index in Hong Kong, which fell 1.6% on Monday, surged 5.2%. The CSI 300 Index , a benchmark for mainland shares, finished up 3.1% in its best day in more than three weeks.
"The unrest in China duly weighed on equity indices everywhere yesterday, and some moderately hawkish commentary from FOMC members weighed additionally on the U.S. market," said Ian Williams, strategist at Peel Hunt.
See:China-focused ETFs jump amid sign the country may be on path toward looser COVID policies
In the U.S., investors got another look at the financial health of consumers going into the year-end holiday season.
Shoppers spent $11.3 billion on Cyber Monday deals, according to Adobe (ADBE). That's a record haul passing the $10.7 spent last year on Cyber Monday sales, according to Adobe. This also follows a record $9.12 billion in online sales during Black Friday, Adobe data shows. But analysts noted that the record sales numbers include the higher prices that consumers are paying as a result of inflation running at a forty year high.
The S&P Case-Shiller U.S. home price index gave a look at America's housing market, which remains under pressure. The Case-Shiller 20-city price index dropped 1.2 % in September, marking the third straight monthly decline.
The U.S. consumer confidence index for November fell to a four-month low as inflation, higher interest rates and recession worries keep grinding at consumer mood.
Investors are working Tuesday with a mixed bag of information, said Paul Nolte, senior vice president at Kingsview Investment Management.
On the one hand, results from the home price index were "a little disappointing" and the consumer confidence data flagged trouble signs like an uptick in inflation expectations, he noted.
At the same time, "there's still some hope" that China's approach to COVID will soften, Nolte said. "Certainly, an opening of China is going to help out a lot," he said but noted it's tough to anticipate the next moves from China's president, Xi Jinping.
See: The stock-market is suffering the worst Fed rate-hike cycle ever. The reason why might surprise you
Investors will soon shift their attention to a Wednesday speech from Federal Reserve Chairman Jerome Powell, who will speak at the Brookings Institution about the outlook for the economy at 1:30 p.m. Eastern. That's following Fed speakers earlier this week, including a MarketWatch interview with St. Louis Fed President James Bullard.
Looking ahead to the rest of the week, the U.S. government will be releasing several reports about the labor market, including job openings for October on Wednesday, followed by the closely watched November employment report on Friday.
On the inflation front, investors will be watching the Personal Consumption Expenditure (PCE) index on Thursday, which is expected to show prices rising 0.4% in October, compared to the 0.3% increase from September.
Read:Most deeply negative Treasury curve in more than four decades has one upbeat takeaway for investors
Companies in focus
-- Jamie Chisholm contributed to this article.
(END) Dow Jones Newswires
November 29, 2022 16:27 ET (21:27 GMT)
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