Why is the stock market down today? Dow Falls, Nvidia slides.

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New Covid-19 lockdowns in Chengdu, China weighed on global markets on Thursday.

Noel Celis/AFP via Getty Images

The stock market started September with further declines on Thursday as China’s new Covid-19 lockdowns weighed on sentiment. This is in addition to concerns about economic data and implications for Federal Reserve policy.

In the midday trade, the


Dow Jones Industrial Average

fell 144 points, or 0.5%. The


S&P500

fell by 1% and the


Nasdaq Compound

decreased by 2.1%.

“A major factor affecting sentiment this morning was a new lockdown in the Chinese city of Chengdu, making it the biggest city to go into lockdown since Shanghai earlier in the year,” said analyst Henry Allen at the Deutsche Bank.

Chengdu city goes into lockdown as Covid-19 outbreaks prompt citywide testing. Residents have been ordered to stay home.

This is a reminder to the markets of China’s zero covid policy, which will come into effect whenever there is a virus outbreak. This means that any company that derives a significant portion of its sales from China will see its sales results drop until the end of the policy.

US stocks with heavy exposure to China took a hit on Thursday.

Starbucks

(symbol: SBUX) and

Wynn Resorts

(WYNN) saw their shares fall 1% and 5.5%, while

Las Vegas Sands

(LVS) and

Nike

(NKE) saw its shares fall 4.7% and 2.2%, respectively.

Estee Lauder

The stock (EL) fell 2.2%.

The Chinese question also weighs on the price of oil, because the country is a major buyer of the raw material. WTI Crude Oil fell more than 3% and is now below $90 a barrel. This puts pressure on oil stocks, with the


Energy Select Sector SPDR

Fund (XLE) down more than 2%.

The latest developments out of China are certainly not helping equities, but the market is already in bad shape. The S&P 500 enters Thursday with a four-day losing streak and is down 8% from the peak of its summer rally reached in mid-August.

The pullback comes as Fed Chairman Jerome Powell told the annual Jackson Hole symposium that the Fed intended to raise interest rates aggressively, rather than slow the pace of rate hikes. rate. The central bank is prioritizing the fight against inflation, potentially at the expense of economic growth.

More news on the state of the economy was released on Thursday. The Institute for Supply Management’s manufacturing index held steady at 52.8 in August, slightly above expectations for a reading of 51.8.

But the weekly jobless claims were not exactly what the markets had wanted. They came in at 232,000, below expectations and below last week’s 237,000. This could indicate strong demand for labor, which could keep inflation high – and the Fed is serious about raising rates.

“The hard data clearly points to a still tight labor market,” wrote Citigroup economist Andrew Hollenhorst. “A tight labor market will continue to put inflationary pressure on wages, which in turn will drive inflation…the Fed will remain focused on fighting inflation.”

But the big news comes Friday, when the Bureau of Labor Statistics releases the August jobs report. Economists expect 318,000 jobs to have been added, down from July’s 528,000 jobs.

“Tomorrow’s jobs report again poses risks for equities because if it is ‘too hot’ it will raise the prospect of further upside and, more importantly, delay when markets recover. ‘expect a rate cut,” wrote Sevens Report’s Tom Essaye.

Here are some stocks in motion on Thursday:

Nvidia

(NVDA) fell 11% following a filing that the US government imposed a new licensing requirement covering exports of some of the

Nvidia
it is

chips to China, including Hong Kong and Russia. The chips included in the requirement are used in data centers for artificial intelligence, data analytics, and high performance computing applications.

C3.ai

(AI) plunged 22% after the artificial intelligence software group cut its revenue outlook and said it would revise its business model, acknowledging an economic downturn.

Okta

(OKTA) fell 32% after the identity software company said business growth was hurt by unexpected issues with Auth0 integration after a 2021 merger. integration issues overshadowed otherwise better-than-expected quarterly results.

MongoDB

(M

comics

) was 25% lower after the database software provider said it expected to report a fiscal 2023 loss worse than previous estimates.

western digital

(WDC) fell 3.1% after being downgraded to Sell from Hold at The Benchmark Company.

Write to Jack Denton at [email protected] and Jacob Sonenshine at [email protected]

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