U.S. stocks dipped in a downbeat start to the trading week after equity markets rallied toward their longest winning streak in 10 months on Friday.
The S&P 500 fell 0.5% after the benchmark index marked its fourth straight week of gains in the previous trading session, officially recouping half of its bear market losses this year. The Dow Jones Industrial Average shed 170 points, or roughly 0.5%, and the Nasdaq Composite was off by 0.3%.
Shares of Disney (DIS) jumped nearly 2% after Daniel Loeb’s Third Point revealed a new stake in the company and urged CEO Bob Chapek in a letter to make a series of changes, including integrating Hulu directly into the Disney+ DTC platform and acquiring Comcast’s remaining minority stake before the early 2024 deadline. The letter also recommended ESPN be spun off to shareholders to help its parent company pay off debt.
The Federal Reserve Bank of New York’s general business conditions index, a measure of the state’s manufacturing activity, posted its second largest drop since 2001, with declines in orders and shipments reflecting a dramatic drop in demand. The gauge fell more than 42 points to -31.3, the second-worst drop in more than two decades after April 2020’s print. The reading came in weaker than the lowest economist estimate, according to Bloomberg data. Readings below zero indicate a contraction.
Elsewhere in economic data, the National Association of Home Buyers/Wells Fargo homebuilder sentiment index also disappointed — falling by 6 points to 49 in August. The reading came in lower than Bloomberg’s most downbeat economist forecast and below the breakeven measure of 50 for the first time since May 2020.
Investors have cheered on the summer’s rally after a series of better-than-expected economic releases renewed optimism on Wall Street. But some strategists remain skeptical of the market rebound as risks associated with inflation and monetary tightening persist.
“The macro, policy and earnings set-up is much less favorable for equities today,” Morgan Stanley’s Michael J. Wilson wrote in a note. “The risk/reward is unattractive and this bear market remains incomplete.”
Overseas, data out of China on Monday showed a slowdown in economic activity across the board last month. The world’s second largest economy saw retail sales, industrial output and investment all come in lower than economists expected in July.
China’s central bank also unexpectedly cut its key interest rate in an effort to turn lagging economic growth around as President Xi Jinping seeks re-election.
The Wall Street Journal reported that Chinese officials are arranging plans for a face-to-face meeting between Xi Jinping and President Biden in Southeast Asia this fall — a trip that would mark their first in-person meeting since Biden was inaugurated.
Oil futures tumbled over concerns about demand in China and the prospect for higher exports out of Iran. U.S. West Texas Intermediate and Brent crude oil each fell roughly 4.5% to $87.97 and $93.66 per gallon, respectively.
Back in the U.S., investors look ahead to a busy week for retail, with the Commerce Department set to release its key monthly report on retail sales Wednesday and earnings due out from Walmart (WMT), Target (TGT), the Home Depot (HD) and other consumer giants.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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