China COVID cases weigh on Wall St; Disney jumps

  • Disney up on Iger’s return as CEO
  • The S&P 500 energy index leads sector declines
  • Grindr is sliding after rocketing in its debut
  • Tesla down with vehicle recall, China worries about COVID
  • Dow up 0.01%, S&P 500 down 0.34%, Nasdaq down 1.05%

Nov 21 (Reuters) – Wall Street’s main indexes started the week roughly lower on China, which said it faced its severest test of the coronavirus pandemic, but pared losses after San Francisco Federal Reserve President Mary Daly commented that officials must be careful to avoid a “painful decline”.

Given that markets have priced in a monetary policy setting that is far beyond what the Fed has imposed on the economy so far, Daly said on Monday “it will be important to be aware of this gap between the federal funds rate and the tightening of the financial sector. Ignoring it increases the chances to tighten too much.”

At 2:20 PM ET, the Dow Jones Industrial Average (.DJI) was up 37.97 points, or 0.11%, at 33,783.66, the S&P 500 (.SPX) lost 8.85 points, or 0.22% , to 3,956.49 and Nass. .IXIC) fell 102.38 points, or 0.92%, to 11,043.68.

Beijing said on Monday it would close businesses and schools in hard-hit districts and tighten rules on entering the city, as infections ticked higher, spooking investors. read more

“There is this fear that China may reimpose some of the covid restrictions that they have reportedly started to lift,” said Carol Schleif, deputy managing director of investments at BMO Family Office. “That’s part of what’s driving tech stocks down because we rely so much on China and Taiwan for critical components.”

U.S. casino operators with operations in China including Wynn Resorts Ltd ( WYNN.O ), Las Vegas Sands Corp ( LVS.N ), MGM Resorts International ( MGM.N ) and Melco Resorts & Entertainment Ltd fell between 2.5395% and 7.6043 %.

Travel stocks including American Airlines Group Inc ( AAL.O ) and Norwegian Cruise Line Holdings Ltd ( NCLH.N ) fell 1% and 1.2%, respectively.

The S&P 500 energy sector index ( .SPNY ) fell nearly 3% on Monday to a four-week low as oil prices fell more than 5% following a report that Saudi Arabia and other OPEC oil producers were discussing an output increase. However, the index took losses after Saudi Arabia denied talks about it.

Energy was the only major S&P 500 sector to gain for the year, rising about 63%.

Walt Disney Co ( DIS.N ) jumped 5.7898% following Bob Iger’s return as CEO of the entertainment giant.

The S&P 500 extended losses from last week as several Federal Reserve officials reiterated the central bank’s pledge to raise interest rates until inflation was under control, as investors now await the release of minutes from the Fed’s November meeting on Wednesday.

Traders are betting heavily on a 50 basis point hike in the December meeting, with a peak for rates expected in June.

Among other stocks, Tesla Inc ( TSLA.O ) fell -6.6374% after the electric car maker said it will recall vehicles in the U.S. over a problem that can cause its taillights to intermittently fail to illuminate.

Gay dating app Grindr ( GRND.N ) plunged amid broader market weakness, after soaring in its New York Stock Exchange debut last session.

Trading volumes are likely to be thin this week as markets will be closed on Thursday for the Thanksgiving holiday and will be open for a half day on Friday.

Falling issues outnumbered advancing ones on the NYSE by a ratio of 1.26 to 1; on the Nasdaq a 1.57 to 1 ratio favored decliners.

S&P 500 posted 9 new 52-week highs and 2 new lows; The Nasdaq Composite registered 76 new highs and 194 new lows.

Reporting by Ankika Biswas, Shubham Batra and Shreyashi Sanyal in Bengaluru; Editing by Arun Koyyur, Shounak Dasgupta and Grant McCool

Our standards: Thomson Reuters Trust Principles.

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