The announcement of renewed COVID restrictions in China put a damper on a significant portion of the U.S. stock market on Monday. As a result, the S&P 500 and the Nasdaq posted solid losses on the first day of a holiday-shortened Thanksgiving week.
The Dow outperformed the other major averages, although it still ended the day with a modest decline. The blue-chip index received support from Disney (DIS), which rose about 6% after the entertainment giant revealed that former CEO Bob Iger would return to the chief executive role.
The Nasdaq Composite (COMP.IND) finished -1.1%, the S&P 500 (SP500) closed -0.4% and the Dow (DJI) ended -0.1%.
The Dow Jones flirted with positive territory but eventually finished lower by 45.41 points, slipping to a close of 33,700.28. Meanwhile, the S&P 500 dipped 15.40 points to end at 3,949.94 and the Nasdaq slumped 121.55 points to conclude trading at 11,024.51.
Even with the overall decline among the major averages, most sectors finished in the green. Seven of the 11 S&P sectors finished higher, although none rose more than 1%. On the downside, Info Tech, Energy and Consumer Discretionary posted greater-than-1% slides.
“Stocks began the holiday-shortened week on a sour note, but losses were not too steep. A higher dollar and ongoing crypto turmoil cast bearish clouds over risk assets,” analyst Mike Zaccardi told Seeking Alpha. “In the commodity space, chatter of an OPEC-led oil production increase pressured WTI and Brent early, but those rumors were put to rest, and oil recovered losses.”
The overall slide came as Chinese authorities re-introduced COVID restrictions in certain areas following three confirmed deaths in Beijing. The shadow of ongoing pandemic limitations raised concerns about supply chains, weighing on the overall market.
“This COVID wave is troubling as it nears some of the more populous districts. It seems the zero-COVID policy is not going away any time soon and that will definitely weigh on global growth,” said Edward Moya, senior market analyst, OANDA.
Tesla (TSLA) was among the big-name stocks weighed down by the China news. Shares of Elon Musk’s EV maker tumbled almost 7%, reaching a new 52-week low.
Turning to the fixed-income market, bonds saw mild selling, with the 2-year yield (US2Y) ticking up about 5 basis points to 4.56%. Meanwhile, the 10-year Treasury yield (US10Y) edged up about one basis point to 3.82%. This action led to an even deeper yield curve inversion, with the spread between the 2-year and 10-year yields reaching another 40-year record.
Among active stocks, J. M. Smucker (SJM) bucked the overall negative trend on the day, edging higher following its Street-beating earnings report.
Read More: Nasdaq, S&P 500 slip on COVID restrictions in China; Disney helps Dow limit losses