Dow drops more than 100 points to start the week on fears of slowing global growth

Dow drops more than 100 points to start the week on fears of slowing global growth

A trader works on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., August 5, 2021.

Andrew Kelly | Reuters

Major U.S. stock indexes slipped Monday to start the week amid fears of slowing global growth, with China’s economic growth slowing and oil prices falling.

The Dow shed about 110 points, or roughly 0.3%. Boeing was among the names leading losses in the blue-chip average. S&P 500 dipped around 0.5% and the Nasdaq Composite fell about 1%.

Data showed Chinese economic growth slowing more than expected. China’s retail sales increased by 8.5% in July year-over-year, below the 11.5% forecast from economists polled by Reuters. Online sales gained just 4.4% for the month. On the manufacturing sector in the country, industrial production increased by 6.4%, below the 7.8% consensus estimate.

The country’s National Bureau of Statistics noted an impact from Covid and domestic flooding, saying the country’s “economic recovery is still unstable and uneven.”

“Delta driven slowdown grips China,” CNBC’s Jim Cramer said in a tweet. “Not sure of impact here yet.”

Shares of stocks linked to a recovering economy fell. Travel and financial names trended lower. Norwegian Cruise Line dropped more than 1% and Bank of America dipped about 1%.

Oil prices dropped Monday. West Texas Intermediate crude futures, the U.S. oil benchmark, fell more than 3%, pressuring energy names. Occidental Petroleum shed roughly 4%.

Retail stocks inched higher ahead of quarterly earnings reports from major companies. Walmart gained about 1% ahead of its quarterly report slated for Tuesday. Home Depot, Target and Lowe’s are also scheduled to report financial results this week.

Tesla’s stock retreated Monday after the National Highway Traffic Safety Administration announced a formal probe into the electric vehicle maker’s Autopilot partially automated driving system.

Shares of Moderna, which are up more than 230% this year, lost more than 9%.

U.S. stocks also pulled back amid growing support within the Federal Reserve to announce a tapering of its bond purchases in September and begin the reduction in buying a month or so after. Interviews with central bank officials, along with their public comments, show growing support for a faster taper timeline than markets had expected a month ago.

The yield on the benchmark 10-year Treasury note dipped below the 1.25% level Monday. Bond yields fall as their prices rise.

The major stock indexes for much of the last month have ground to new records on the back of robust corporate earnings results. The S&P 500 has closed at a record high 48 times this year out of 155 trading days, or 31% of the time — the most frequent closing highs on record back to 1950.

Eighty-seven percent of S&P 500 companies have reported positive earnings per share surprises for the second calendar quarter, according to FactSet as of Friday. If 87% is the final percentage, it will mark the highest percentage of S&P 500 companies reporting positive EPS surprises since FactSet began tracking this metric in 2008.

“These are the dog days of August, and low volume and directionless volatility are the order of the moment with 2Q21 earnings season mostly behind us,” Raymond James’ Tavis McCourt said in a note.

— With reporting by Evelyn Cheng.

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