Unrest In China Contributing To Pullback On Wall Street

wallstreet down 040218 28nov22 lt

Stocks have moved mostly lower in morning trading on Monday, giving back ground following the upward move seen last week. The Dow is pulling back off the seven-month closing high set last Friday.

Currently, the major averages are just off their lows of the session. The Dow is down 183.84 points or 0.5 percent at 34,163.19, the Nasdaq is down 80.46 points or 0.7 percent at 11,145.90 and the S&P 500 is down 28.06 points or 0.7 percent at 3,998.06.

Concerns about the latest developments in China are weighing on Wall Street, as widespread protests against the Beijing's zero-Covid policy broke out over the weekend.

A recent surge in new Covid cases in China has led officials to impose new restrictions in several major cities, dashing hopes the world's second-largest economy was on the way toward easing curbs.

Craig Erlam, senior market analyst at OANDA, said the protests "highlight how increasingly frustrated the public is becoming with the leadership's zero-Covid policy."

"Record cases across multiple cities are putting the policy to the test and the unrest highlights the enormity of the challenge facing President Xi Jinping and his commitment to zero-Covid," Erlam said.

He added, "The combination of these creates huge uncertainty, both in terms of how the protests are handled and what the whole experience means for the future of the policy and the economy."

Trading activity remains somewhat subdued, however, with a lack of major U.S. economic data keeping some traders on the sidelines.

Traders may be reluctant to make significant moves as they look ahead to the release of the closely watched monthly jobs report on Friday.

Reports on consumer confidence, personal income and spending and manufacturing activity are also likely to attract attention in the coming days along with remarks by Federal Reserve Chair Jerome Powell.

Energy stocks are seeing significant weakness, as the price of crude oil fell to its lowest intraday level in eleven months earlier in the day.

After falling as low as $73.60 a barrel, crude for January delivery has regained ground but currently remains down $0.41 at $75.87 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index is down by 1.8 percent and the NYSE Arca Oil Index is down by 1.5 percent.

Considerable weakness is also visible among airline stocks, as reflected by the 1.8 percent slump by the NYSE Arca Airline Index.

Gold, computer hardware and semiconductor stocks have also moved to the downside on the day, while tobacco stocks are among the few groups bucking the downtrend.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index fell by 0.4 percent, while China's Shanghai Composite Index slumped by 0.8 percent.

Most European stocks have also moved to the downside on the day. While the U.K.'s FTSE 100 Index is nearly unchanged, the French CAC 40 Index is down by 0.5 percent and the German DAX Index is down by 0.8 percent.

In the bond market, treasuries are seeing modest strength, extending a recent upward trend. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.7 basis points at 3.674 percent.

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