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Apple, Energy Shares Drag Wall St Lower Amid China COVID Protests

Published: November 28, 2022
The Wall Street street sign is seen at the New York Stock Exchange during afternoon trading on Sept. 13, 2022 in New York City. (Image: Michael M. Santiago/Getty Images)

Wall Street’s main indexes fell on Monday as protests in major Chinese cities against strict COVID-19 policies sparked concerns over economic growth and dragged commodity-linked shares lower, while Apple slid on worries about a hit to iPhone production.

Shares of the tech giant fell 2 percent and weighed the most on the benchmark S&P 500 index, as growing worker unrest at the world’s biggest iPhone factory in China fanned fears of a deeper hit to the already constrained production of higher-end models.

Rare protests in major Chinese cities over the weekend against the country’s strict zero-COVID curbs have hit growth expectations in the world’s second-largest economy.

“If these protests continue, it could disrupt supply chains and the reopenings, a glimpse of which we saw earlier this year,” said Brian Klimke, director of investment research at Cetera Financial Group.

“It will continue to weigh on investors’ minds going forward.”

The S&P 500 energy index and the materials index slid 1.7 percent and 1.4 percent, respectively, making them the biggest sectoral decliners as oil and metal prices dropped on China news.

U.S.-listed shares of Chinese companies such as Bilibili Inc, Alibaba Group Holding Ltd, Inc, Baidu Inc and Nio Inc, however, eked out gains, rising between 1 percent and 2.2 percent.

“Those that are buying might be trying to pick up some ball games on stocks that have been way beaten down or maybe they think that this is going to force the (Chinese) party’s hand into relaxing some of the restrictions,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield.

At 12:29 p.m. ET, the Dow Jones Industrial Average was down 270.56 points, or 0.79 percent, at 34,076.47, the S&P 500 was down 35.13 points, or 0.87 percent, at 3,990.99, and the Nasdaq Composite was down 87.55 points, or 0.78 percent, at 11,138.80.

A 1.2 percent rise in shares of limited the downside, after an industry report estimated spending during Cyber Monday, the biggest U.S. online shopping day, to rise as much as $11.6 billion, encouraged by some of the biggest discounts and deals to attract inflation-wary consumers.

Trading in other growth stocks, including Microsoft Corp, Meta Platforms Inc, Nvidia Corp, Netflix Inc and Tesla Inc, were mixed.

Among other stocks, Biogen Inc fell 3.9 percent following a report of death during a clinical study of its experimental Alzheimer’s drug.

Shares of cryptocurrency and blockchain-related companies, including Coinbase Global Inc, Riot Blockchain Inc and Marathon Digital Holdings Inc, were down about 2.5 percent each following lender BlockFi’s bankruptcy filing, the latest casualty since FTX’s collapse earlier this month.

For the week, investors will keep a close watch on nonfarm payrolls for November, the second estimate for third-quarter gross domestic product and consumer confidence this month.

Declining issues outnumbered advancers for a 2.47-to-1 ratio on the NYSE and for a 1.95-to-1 ratio on the Nasdaq.

The S&P index recorded 11 new 52-week highs and two new lows, while the Nasdaq recorded 74 new highs and 102 new lows.

By Reuters (Reporting by Ankika Biswas and Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta and Anil D’Silva)