Stock futures fell Monday as social unrest from China’s prolonged Covid restrictions weighed on markets, sending oil prices lower — after Wall Street notched gains during the Thanksgiving holiday-shortened week.
Futures tied to the Dow Jones Industrial Average lost 178 points, or 0.5%. S&P 500 and Nasdaq 100 futures each dropped 0.7%.
Over the weekend, demonstrations broke out in mainland China as people vented their frustrations with Beijing’s zero-Covid policy. Local governments tightened Covid controls as cases surged, even though earlier this month Beijing adjusted some policies that suggested the world’s second-biggest economy was on its way to reopening.
The developments weighed on sentiment in Asia trading, with oil futures hovering around new 2022 lows around demand concerns. Shares of companies with big production facilities in the country led premarket losses. Shares of Apple lost 1.7% and Tesla declined 2.2% in premarket trading.
The moves come after all three major U.S. indexes ended last week higher, even with the shortened trading time due to the Thanksgiving holiday. The Dow rose 1.78%, and the S&P 500 increased 1.53% during the short week. The tech-heavy Nasdaq lagged the other two indexes but was still up 0.72% in the same timeframe.
Stocks were lifted during the week by comments from Federal Reserve officials signaling that the central bank would step down its aggressive rate hike path as inflation cools. Minutes from the Fed’s November meeting confirmed the likely shift in policy.
“A substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate,” the minutes stated.
In the last week of November, investors will be watching more earnings reports and a slew of economic releases that will give further information on the state of the consumer and the U.S. economy. Intuit, Salesforce and Five Below are among companies scheduled to report earnings. Personal consumption data and the labor report for November will also be released this week.
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Apple (AAPL) – Apple could reportedly see a production shortfall of close to 6 million iPhone Pro models due to Covid-related unrest at contract manufacturer Foxconn’s China factory. A person familiar with assembly operations told Bloomberg that Apple and Foxconn do expect to be able to make up that shortfall in 2023. Apple slid 1.7% in premarket trading.
STOCK SYMBOLS: AAPL
Taboola.com (TBLA) – The software company’s stock soared 65.2% in premarket action after it announced a 30-year agreement with Yahoo, under which Taboola will power native advertising on all Yahoo platforms.
STOCK SYMBOLS: TBLA
Wynn Resorts (WYNN), MGM Resorts (MGM), Melco Resorts (MLCO), Las Vegas Sands (LVS) – Casino stocks rallied in off-hours trading after the Chinese government granted the companies provisional licenses to continue operating in Macau. Wynn jumped 5.9%, MGM added 2.2%, Melco rallied 8% and Las Vegas Sands rose 3.2%.
STOCK SYMBOLS: WYNN
Biogen (BIIB) – Biogen dropped 5.5% in the premarket after online publication Science.org reported that a woman participating in a trial of the experimental Alzheimer’s treatment lecanemab had recently died from a brain hemorrhage. The publication said the trial was sponsored by Biogen and Japanese pharmaceutical company Esai.
STOCK SYMBOLS: BIIB
Exxon Mobil (XOM), Chevron (CVX)** – These and other energy stocks fell in the premarket as WTI Crude touches its lowest level in 11 months. Exxon lost 1.8% while Chevron dropped 1.7%.
STOCK SYMBOLS: XOM
Anheuser-Busch InBev (BUD) – Anheuser-Busch InBev jumped 4.2% in the premarket after a double upgrade from J.P. Morgan Securities, which raised the beer brewer’s stock to “overweight” from “underweight.” The firm now sees the potential for earnings outperformance while also noting a rapidly improving balance sheet.
STOCK SYMBOLS: BUD
First Solar (FSLR) – The solar company’s stock fell 2.6% in the premarket following a downgrade by J.P. Morgan to “neutral” from “overweight.” J.P. Morgan’s call notes the stock’s outperformance since the announcement of the Inflation Reduction Act, which provided additional incentives for alternative energy.
STOCK SYMBOLS: FSLR
News Corp (NWSA), Fox (FOXA) – T. Rowe Price is the latest major shareholder to express concern about Rupert Murdoch’s plan to recombine News Corp and Fox, according to a report in The New York Times. The investment firm is News Corp’s second-largest shareholder behind the Murdoch family with a 12% stake and is said to believe a combination would undervalue News Corp shares.
STOCK SYMBOLS: NWSA
Pinduoduo (PDD) – The China-based e-commerce platform beat top and bottom line estimates for its latest quarter, as China’s strict Covid policies prompted more consumers to shop online. Pinduoduo surged 14.2% in the premarket.
STOCK SYMBOLS: PDD
FULL DISCLOSURE:
/u/bigbear0083 has no positions in any stocks mentioned. Reddit, moderators, and the author do not advise making investment decisions based on discussion in these posts. Analysis is not subject to validation and users take action at their own risk.
DISCUSS!
What’s on everyone’s radar for today’s trading day ahead here at r/stocks?
I hope you all have an excellent trading day ahead today on this Monday, November 28th, 2022! 🙂
