Stocks Continue to Struggle On Growth Concerns
3:11 pm Monday, November 21st, 2022
The stock market entered this holiday-shortened week on the softer side as investors continue to deal with growth concerns. These worries were stoked by an understanding that China continues to deal with its zero-COVID policy after reporting its first COVID-related deaths in six months. There have also been reports that people in Beijing’s largest district are being urged to stay home.
Price action in the commodities market is a manifestation of these growth concerns. Copper futures are down 1.4% to $3.58/lb and WTI crude oil futures are down 0.7% to $79.58/bbl.
Crude oil prices have been volatile today as market participants weigh conflicting news reports. The Wall Street Journal reported that Saudi Arabia/OPEC+ is considering increasing production by 500,000 barrels per day at its December 4 meeting, a day ahead of the EU embargo on Russian oil. This was denied by Saudi officials, according to Bloomberg. In addition, Goldman Sachs cut its 4Q22 price forecast by $10 to $100/bbl.
Mega cap stocks are under pressure today, dragging on index performance. Apple (AAPL) is a notable losing standout after the South China Morning Post reported the company is extending the wait time in China for the iPhone 14 Pro and Pro Max models due to production issues at the Foxconn manufacturing facility in Zhengzhou.
Tesla (TSLA) is another standout for the mega caps, falling to a new 52-week low. The Vanguard Mega Cap Growth ETF (MGK) is down 1.2% versus a 0.2% loss in the Invesco S&P 500 Equal Weight ETF (RSP) and a 0.5% loss in the S&P 500.
Roughly half of the 11 S&P 500 sectors trade in negative territory. Consumer staples (+0.7%) and industrials (+0.4%) exhibit the strongest gains while consumer discretionary (-1.9%) and energy (-1.6%) are the top laggards.
The Dow Jones Industrial Average enjoys slimmer losses than its peers thanks to Disney (DIS). The company rallied on the news that Bob Chapek stepped down as CEO and that former CEO Bob Iger is coming back to run things for a two-year stint.
The 10-yr note yield is flat at 3.82% and the 2-yr note yield is up three basis points to 4.52%.
