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Wall Street slips as concerns rise of stricter China COVID curbs

Wall Street’s main indexes ended Monday roughly down on fears that China could resume stricter measures to fight COVID-19 after it said it faces its most severe test of the pandemic.

November 22, 2022
By Carolina Mandl
22 November 2022

By Carolina Mandl

Nov 21 (Reuters) – Wall Street’s main indexes ended
Monday roughly down on fears that China could resume stricter
measures to fight COVID-19 after it said it faces its most
severe test of the pandemic.

Beijing said on Monday it would shut businesses and
schools in hard-hit districts and tighten rules for entering the
city, as infections ticked higher.

“There is this fear that China might reinstitute some of the
COVID restrictions that they’ve just purportedly started to
lift,” said Carol Schleif, deputy chief investment officer at
BMO Family Office.

U.S. casino operators with businesses in China including
Wynn Resorts Ltd, Las Vegas Sands Corp, MGM
Resorts International and Melco Resorts & Entertainment
Ltd all fell at least 2%.

The Dow Jones Industrial Average fell 45.41 points,
or 0.13%, to 33,700.28, the S&P 500 lost 15.4 points, or
0.39%, to 3,949.94 and the Nasdaq Composite dropped
121.55 points, or 1.09%, to 11,024.51.

Trading volume was low on Monday, and likely to lessen
towards the Thanksgiving holiday on Thursday, leaving markets
more prone to volatility.

Volume on U.S. exchanges was 9.43 billion shares, compared
with the 11.88 billion average for the full session over the
last 20 trading days.

“If you want to blame a little bit of profit taking on some
concerns on spikes in COVID cases, that’s fine,” said Jack
Janasiewicz, lead portfolio strategist and portfolio manager at
Natixis Investment Managers Solutions. “It gets really tricky
because of volume.”

Stocks trimmed losses in early afternoon after the San
Francisco Federal Reserve President Mary Daly commented that
officials need to be careful to avoid a “painful downturn.”

Cleveland Fed President Loretta Mester echoed Daly, saying
she supports a smaller rate hike in December.

The S&P 500 energy sector index fell almost 3% on
Monday to its lowest level in four weeks as oil prices tumbled
more than 5% after a report that Saudi Arabia and other OPEC oil
producers were discussing an output increase. The index,
however, pared losses after Saudi Arabia denied talks about it.

Energy was the only major S&P 500 sector eying gains for the
year, surging around 63%.

Walt Disney Co jumped 6.30% after Bob Iger’s return
as chief executive to the entertainment giant.

The S&P 500 extended its fall from the previous week when
multiple Federal Reserve officials reiterated the central bank’s
pledge to raise rates until inflation was in check, as investors
now await the release of minutes from the Fed’s November meeting
on Wednesday.

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

Among other stocks, Tesla Inc plummeted 6.84% after
the electric-car maker said it will recall vehicles in the
United States over an issue that may cause tail lights to
intermittently fail to illuminate.

Gay dating app Grindr tumbled 46.00% amid a broader
market weakness, after skyrocketing in its debut on the New York
Stock Exchange in the previous session.

Declining issues outnumbered advancing ones on the NYSE by a
1.27-to-1 ratio; on Nasdaq, a 1.60-to-1 ratio favored decliners.

The S&P 500 posted 9 new 52-week highs and 2 new lows; the
Nasdaq Composite recorded 96 new highs and 220 new lows.
(Reporting by Carolina Mandl, in New York, Ankika Biswas,
Shubham Batra and Shreyashi Sanyal in Bengaluru; Editing by Arun
Koyyur, Shounak Dasgupta and Grant McCool)

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