Wall Street closes lower, China and the Fed catch their breath

The Dow Jones fell 1.45%, the Nasdaq plummeted 1.58% and the broader S&P 500 index fell 1.54%.

The New York Stock Exchange closed lower on Monday amid concerns over the possible impact of the country’s protest movement on the Chinese economy and proactive comments from US central bankers.

The Dow Jones was down 1.45%, the Nasdaq index was down 1.58% and the broader S&P 500 index was down 1.54%.

“The market seems to be focused on China’s zero-Covid policy and not much else,” commented B. Riley Wealth Management’s Art Hogan.

Following spontaneous demonstrations over the past few days to demand a total or partial lifting of health restrictions linked to the resurgence of the coronavirus, the Chinese government responded on Monday by deploying sizeable police forces, particularly in Shanghai and Beijing.

“We started the protests in China on the wrong foot, and then we had several members of the Fed making aggressive exits, with harsh words about monetary tightening,” said Cresset Capital’s Jack Ablin.

“There is work to be done” in terms of monetary tightening, said New York Branch President John Williams, for whom curbing inflation “will take time”.

“We still have a long way to go,” said James Bullard, president of the St. Louis branch, for which the Fed’s interest rate must at least rise to a range between 5% and 5.25%, up from 3.75% 4% for now.

“Everything seems to be going in the direction of less risk taking,” said Jack Ablin, particularly with the downwind winds in commodities and an appreciation in the dollar, a safe haven par excellence.

The VIX index, which measures market volatility, rose more than 8% on Monday.

For Art Hogan, the caution of the operators is also explained by the program of the week, which on Wednesday is loaded with indicators and interventions by central bankers, in particular Fed President Jerome Powell.

The release of the PCE consumer price index follows on Thursday, followed by the monthly US employment report on Friday.

“The three would have to be satisfactory for the market to find its way to a recovery,” warned Art Hogan, namely slowing inflation, a still-buoyant job market and a measured tone from Jerome Powell.

In this wait-and-see mood, the bond market developed very sluggishly. The US 10-year Treasury yield was unchanged at 3.67%.

In line with black gold’s price being pushed down by China for much of the day before recovering at the very end of the session, oil companies such as ExxonMobil (-3%) and Herringbone (-2.91%) suffered.

Other mining and processing giants such as miner Freeport-McMoRan (-2.58%) or steelmaker US Steel (-1.43%) suffered a thunderstorm that weighed on Chinese demand in proportion to the uncertainty.

On the technology side, Apple (-2.63% to $144.22) continued to suffer from the crisis in China, where the main iPhone manufacturing base is in Zhengzhou (centre), which is likely to limit shipments of Star phones.

Casino giants Wynn Resorts (+4.36%) and Las Vegas Sands (+1.11%) benefited from the renewal of their operating license, in contrast to MGM Resorts (-2.27%), which however also received the license by 10 years by the authorities of Macau precious sesame.

After a strong “Black Friday” for online sales, Amazon (+0.58%) and the supermarket chains Walmart (+0.29%) or Target (+1.22%), which are very present in e-commerce, overcame the prevailing downturn.

Disney (-3.22% to $95.69) paid for its latest animated film “Avalonia: The Strange Journey” (“Strange World”) to fail for its theatrical release weekend in North America.

According to multiple experts quoted by the industry publication Variety, this feature film’s poor performance could result in a loss of at least $100 million for the entertainment giant.

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