Stocks fall as Chinese Covid protests dampen market sentiment

Shares fell on Monday as social unrest caused by prolonged Covid restrictions in China weighed on the markets, driving down oil prices after Wall Street recorded gains during the shortened Thanksgiving holiday week.

The Dow Jones Industrial Average fell 160 points, or 0.5%. The S&P 500 and the Nasdaq Composite 0.6% and 0.4%, respectively.

Over the weekend, protests erupted in mainland China as people expressed frustration with Beijing’s zero Covid policy. Local governments have tightened Covid controls as cases have risen, although earlier this month Beijing adjusted some policies that suggested the world’s second-largest economy was on the verge of reopening.

The developments have rippled through global markets. with oil futures hovering around new 2022 lows around demand concerns.

Shares of companies with large production facilities in the country were under pressure. Apple lost 1.5% after Bloomberg reported unrest at a factory in China could mean 6 million fewer iPhone Pro units for the year.

“You can’t rewire the supply chain overnight,” said Mohamed El-Erian, chief economic adviser at Allianz. “So what does this mean for these companies? It means supply uncertainty.”

The moves come after all three major U.S. indices ended last week higher, even with trading time shortened due to the Thanksgiving holiday.

Stocks were lifted during the week by comments from Federal Reserve officials signaling that the central bank would abandon its aggressive rate hike path as inflation cools. Minutes from the Fed’s November meeting confirmed the likely policy shift.

Investors will be watching more earnings reports this week and a slew of economic releases that will provide further insight into the state of the US consumer and economy. Personal consumption data and the November employment report will also be released.

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