The stock market closed lower Monday as investors worried that the state of the economy and rising Covid-19 infections in China could spread and thwart the key holiday shopping season. Dow Jones component Walt Disney soared after it booted CEO Bob Chapek and replaced him with former Chairman and CEO Bob Iger.
The S&P 500 shed 0.4% while the Nasdaq closed 1.1% lower. The Dow Jones Industrial Average lost 0.1%. The Russell 2000 small-cap index trimmed 0.6%.
Volume on the NYSE and Nasdaq was higher vs. the same time on Friday, early data showed. This is a holiday-shortened week so expect volume to contract as folks head out to see families and friends.
The 10-year Treasury note yield was unchanged at 3.826%. Bitcoin was down 2.7% to $15,807.
Odds for a 50-basis-point hike at the December Fed meeting stand at 80.6% while 19.4% are looking for a 75-basis-point hike, according to the CME FedWatch Tool.
"Investors should be following the Fed's guidance as rates will remain high for a longer period," wrote John Kerschner, head of U.S. securitized products and portfolio manager at Janus Henderson, in a paper published over the weekend.
Covid, Economic Worries Burden The Stock Market
Adam Turnquist, chief technical strategist, and Marc Zabicki, chief investment officer at LPL Financial added: "Recent inflation data has tempered expectations for future Federal Reserve tightening, including a potential peak in the terminal rate near 5.0% in May or June of 2023. While the market has welcomed this news, history suggests the path to a Fed pivot could be volatile for stocks due to elevated inflation and interest rate risk."
Crude oil lost 0.4% to $79.74 per barrel after plunging as much as 6% in morning trading. The futures contract recovered when Saudi Arabia denied a report it would propose that OPEC increase production by 500,000 barrels.
The Energy Select Sector SPDR ETF fell 1.4% and the S&P Consumer Discretionary Sector ETF fell 1.5%, making them the biggest movers among the S&P 11 sectors.
Shares of Exxon Mobil fell 1% Monday but are still near the top of a buy zone. Exxon shot up after beating third-quarter earnings estimates on Oct. 28.
Chinese stocks fell as rising illnesses and four Covid-19 deaths undermined hopes that the Asian nation will abandon their "zero Covid" policy. Some investors worry the number of Covid cases worldwide will surge this winter.
Alibaba closed 4.4% lower, Pinduoduo shed 3.6% and NIO plunged 4.4% on the China news.
Disney Stock Rallies As Bob Iger Retakes The Helm
Walt Disney rallied 6.3% Monday on news that former Chairman and CEO Bob Iger is taking back the CEO position, effective immediately. Bob Chapek replaced Iger in February 2020 but has struggled during his tenure.
The theme-park and media giant reported worse-than-expected fiscal Q4 losses in the Disney+, Hulu, and ESPN Now streaming services, losing twice as much money as one year ago. Disney stock remains 40% off its 52-week high.
Netflix fell 1% in light volume, reacting to the Disney news. Netflix stock is finding support at its 21-day exponential moving average.
Retailers set to post earnings Tuesday include Best Buy, Nordstrom, Dollar Tree and Dick's Sporting Goods.
Fertilizer stocks soared as lithium carbonate, the key ingredient in electric vehicles batteries, neared record highs. Chilean-based SQM led the way with a gain of 9.5%. SQM blew past Q3 earnings estimates late last Wednesday, while announcing an expansion of output.
SQM is in a cup with handle with a buy point of 112.45.
Stock Market Today: Tesla, Smucker's, Domino's
Tesla plummeted 6.8% as investors worried that CEO Elon Musk's Twitter troubles will spread like a contagion into EV sales. The stock fell to a two-year low and is now down more than 58% since the all-time high at 414, posted on Nov. 4, 2021.
J.M. Smucker gained 1.4% after reporting a beat on Q3 2023's top and bottom lines. The company also raised its fiscal 2023 EPS and net sales growth. Shares are in the 5% buy zone of a cup-with-handle base, with a buy point of 145.
Domino's Pizza rose 2.7% on news it will employ 800 Chevy Bolt electric vehicles in its delivery fleet. The first 100 are scheduled to arrive in November, with the remaining 700 in future months. The company cites lower maintenance costs, gas expense savings and advanced safety features as benefits for adding the EVs.
General Motors, which makes the Chevy Bolt, dipped 0.6%.
Dell Technologies fell 2.3% and Zoom Technologies lost 1.7%, ahead of Q3 earnings releases scheduled after the close.
The Innovator IBD 50 ETF lost 1.1%, brought down by oil stocks Earthstone Energy, Diamondback Energy and Texas Pacific Land. The latter fell 6.5%. TPL is an oil & gas royalty trust.
Follow Michael Molinski on Twitter @IMmolinski
