Worries over the strength of China’s economy – and a surprising central bank move there – weighed on stocks in early trading Monday, though the major indexes managed to bounce back as the session wore on.
Overnight, a round of data was released that showed economic growth in the mainland slowed in July. The reports included worse-than-expected readings on retail sales and industrial output, as well as a sharp rise in the youth unemployment rate, which hit 19.9% last month – its highest level since the data was first published in 2018.
“The economic data from China overnight was very disappointing, to put it mildly,” says Craig Erlam, senior market analyst at currency data provider OANDA. “Combined with the lending figures on Friday, it does not paint a good picture of domestic demand or the growth outlook. It seems the reopening boost was both uninspiring and short-lived.” In reaction to the weak data, the People’s Bank of China unexpectedly cut two key lending rates to help spark growth.
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The headlines from China dragged U.S. crude futures down 2.9% to $89.41 per barrel. As such, energy (-1.9%) was the worst-performing sector today, with oil stocks like Valero Energy (VLO, -2.8%) and Devon Energy (DVN, -3.0%) suffering notable declines.
While the major indexes spent most of the morning in negative territory, buyers swooped in around lunchtime to push them higher. By the close, the Nasdaq Composite was up 0.6% at 13,128, while the S&P 500 Index (+0.4% at 4,297) and the Dow Jones Industrial Average (+0.5% at 33,912) also notched modest gains.
Other news in the stock market today:
- The small-cap Russell 2000 added 0.2% to 2,021.
- Gold futures tumbled 1% to end at $1,798.10 an ounce.
- Bitcoin slipped 0.8% to $23,989.59. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
- Walt Disney (DIS) rose 2.2% after Third Point, the hedge fund founded by billionaire investor Daniel Loeb, unveiled a new stake in the entertainment giant. The activist investor is reportedly suggesting several changes at Disney, including spinning off ESPN and voting in new board members. Third Point previously took a stake in DIS shares in 2020 before selling off that stake in Q1 of this year.
- Bed Bath & Beyond (BBBY) surged 23.4%, marking its fourth straight win. BBBY stock is now up more than 200% so far in August thanks to renewed interest from the Reddit crowd. Other meme stocks weren’t in favor today, with AMC Entertainment (AMC, -1.0%) and …….