4:08pm: Cloud computing firms take a beating
The Dow ended nearly flat after spending time on both sides of the flatline. The blue-chip index picked up 27 points, less than 0.1%, to end the day at 32,224. The Nasdaq dropped 142 points, 1.2%, to 11,663, and the S&P 500 slid 15 points, 0.4%, to 4,008.
Thus far, markets have not shown signs of reversing a seven-week Dow losing streak and a six-week S&P 500 slump.
It was a tough day for cloud computers, as Datadog Inc and Cloudfare Inc both saw shares drop 10%, while Atlassian Corporation Plc dropped more than 6%.
12:05pm: US stocks attempt recovery at noon
US stocks made an attempt at recovery at midday, but market analysts believe a significant rebound is unlikely given the current economic climate.
At noon, the Dow had gained 54 points at 32,250 points, while the S&P 500 was steady 4021 points.
The Nasdaq, however, was lagging having shed 60 points at 11,745 points.
City Index and Forex.com market analyst Fawad Razaqzada said there was no end in sight for the bear trend with a plethora of negative forces weighing on investor sentiment including inflation, weakening growth in China, rising interest rates, and cryptocurrency in turmoil.
“As a result, the markets have been unable to stage a sustainable rally and explains why there’s been no real follow-through after the rally at the back end of last week,” Razaqzada said.
“News continues to disappoint, so it is difficult to see an end to this.”
IG chief market analyst Chris Beauchamp agreed that hopes of a rebound in equities were fading fast, in part thanks to the grim data from China.
“It is certainly quite worrying that even the low valuations currently on offer in many stocks cannot tempt investors into buying – a sign of just how much the macroeconomic outlook worries everyone right now,” Beauchamp said.
“It looks like more downside is to come before the ‘buy the dip’ crowd really get their moves on.”
Meanwhile, Twitter Inc (NYSE:TWTR)’s stock price continued to drop following the news on Friday that Tesla Inc (NASDAQ:TSLA) CEO Elon Musk’s proposed $44 billion acquisition of the social media company was on hold, putting the stock on course for its seventh successive daily decline in a row.
Just after noon, Twitter was down about 5.5%, trading at $38.50 per share.
JetBlue Airways (NASDAQ:JBLU) Corporation was also down about 4% following the news it is undertaking a hostile takeover bid for Spirit Airlines Inc.
The company has proposed $30 a share, $3 less than its initial offer which was rejected by Spirit two weeks ago. Just after noon, Spirit's stock price was up about 12%, trading at $19 a share.
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9:40am: US stocks open in the red
US stocks opened lower on Monday as the release of new economic data from China which showed a slowdown in retail sales and industrial output in the country added to worries about the global economy.
Shortly after the open, the Dow had shed 90 points at 32,107 points.
The S&P 500 was down 23 points at 4000 points and the Nasdaq had slipped 127 points at 11,678 points.
6.30am: Stocks seen heading lower
US stocks were expected to open lower on Monday, continuing their general downtrend from recent weeks as investors worry that higher inflation and rising interest rates will crimp economic growth.
News that retail sales and industrial output in China had dropped in April weighed on sentiment, underscoring wider concerns about the global economy and signaling that the uncertain tone in equity markets is likely to continue.
Futures for the Dow Jones Industrial Average lost 0.2% in premarket trading, while those for the broader S&P 500 index shed 0.4%, and contracts for the Nasdaq-100 slipped 0.7%.
“The (Chinese) data has made traders anxious about the global economic outlook. The general trend is likely to prevail in the market, which is that the dollar index continues to act as a safe haven, Treasuries will soar, and oil prices may move further lower; this shows that this week could be another week of weakness for the global equity markets,” said Naeem Aslam, chief market analyst at avatrade.com.
In data out today, China’s industrial output fell 2.9% in April from the year-ago period while retail sales slipped 11.1%.
“The disappointing Chinese economic numbers are dampening economic sentiment further. Clearly, it is China’s zero-tolerance policy that is causing the industrial output and consumer spending to break down, and currently, they are sitting at their worst level since the pandemic began,” added Aslam.
Investors are increasingly worried that the wider global economy is heading for a slowdown and that corporate bottom lines will suffer as a result.
“Market players are highly concerned that a recession is likely to happen, and central banks from the developed world are increasing interest rates when economic growth is slowing down,” said Aslam.
“Geopolitical tensions aren’t going away as Finland and Sweden’s intentions of applying for NATO aren’t helping the Russia and Ukraine conflict situation,” he noted.
Despite a modest rebound at the end of last week, the S&P 500 is on its worst losing streak since June 2011.
US data last week showed that inflation remains a key concern. Headline CPI inflation was 8.3% in April, slower than the 8.5% seen in March but higher than expectations of around 8.1%. There is no indication yet whether inflation has peaked. Meanwhile, the US Fed is set on a path of aggressive interest rate increases and Fed chairman Jerome Powell said, in an interview with Marketplace last week, that it would be a challenge to achieve a soft landing for the world’s biggest economy.
Elsewhere, oil futures were lower. WTI crude futures were down 0.6% to $109.78 a barrel while Brent crude futures fell 0.8% to $110.64 a barrel.
Contact the author at jon.hopkins@proactiveinvestors.com