Stocks fell on Monday as social unrest from China’s prolonged Covid restrictions weighed on markets, sending oil prices lower — after Wall Street rallied during the shortened Thanksgiving holiday.
The Dow Jones Industrial Average fell 160 points, or 0.5 percent. The S&P 500 and Nasdaq Composite 0.6% and 0.4%, respectively.
Over the weekend, demonstrations broke out in mainland China as people vented their frustrations over Beijing’s zero-Covid policy. Local authorities tightened Covid controls as cases surged, although Beijing earlier this month adjusted some guidelines that suggested the world’s second-largest economy was on track to reopen.
The development reverberated across global markets. with oil futures hovering around new 2022 lows around demand concerns.
Shares of companies with large production facilities in the country were under pressure. Apple lost 1.5% after Bloomberg reported unrest at a factory in China could mean 6 million fewer iPhone Pro units for the year.
“You can’t rewire the supply chain overnight,” said Mohamed El-Erian, chief economic adviser at Allianz. “So what does that mean for these companies? It means supply uncertainty.”
The moves come after all three major U.S. indexes finished higher last week, even with the shortened trading hours due to the Thanksgiving holiday.
Stocks were lifted during the week by comments from Federal Reserve officials that signaled the central bank would scale back its aggressive rate hike path as inflation cools. Minutes from the Fed’s meeting in November confirmed the likely shift in policy.
Investors will watch this week for several earnings reports and a series of economic releases that will provide additional information on the state of the consumer and the US economy. Personal consumption data and the work report for November will also be made public.