US Stocks Begin Week Mostly Lower as First Manufacturing Data for May Turns Negative

Last Updated: Monday, May 16, 2022 4:39 PM | MT Newswires

US stocks started the week mostly lower as a closely monitored manufacturing index turned negative in May amid concerns of slowing economic growth and the prospect of higher rates from the US Federal Reserve.

The Dow Jones Industrial Average managed to close with small gains at 32,223.42 on Monday, while the S&P 500 fell 0.4% to 4,008.01 and the Nasdaq Composite was 1.2% lower at 11,662.79. Consumer discretionary and technology sectors led the decliners, while energy was the biggest gainer.

The US 10-year yield dropped by 5.1 basis points to 2.88%.

West Texas Intermediate crude oil futures jumped by $3.55 to $114.04 a barrel.

The New York Federal Reserve's Empire State manufacturing index slumped to -11.6 in May from 24.6 in April, compared with expectations for a drop to 15 in a survey compiled by Bloomberg. The first reading in May for manufacturing suggests the sector contracted in the month.

In China, the unemployment rate across the country's largest cities climbed to a new high of 6.7% in April as hundreds of millions of people remained under full or partial lockdowns, Stifel said in a research note Monday. Further, Chinese retail sales in April fell more than 11% year over year, manufacturing activity slipped by nearly 5%, and industrial output dropped roughly 3% in the month from a year earlier.

"The latest economic figures show the country's zero-COVID policy is undermining domestic activity," Stifel Chief Economist Lindsey Piegza said. "At the very least, it appears officials are growing aware of the impact of such a stringent response to the virus," Piegza said in the note. They are "increasingly willing to take action to potentially lessen at least some of the negative repercussions, a positive notion for global supply chains and investors," she said.

Over the weekend, the People's Bank of China cut mortgage base rates for new lending to first-time buyers to 4.4% from 4.6% to support the country's housing market.

Economic data highlights for the week include the Commerce Department's US retail sales report on Tuesday and The National Association of Realtors' April snapshot of US home sales on Thursday.

In company news, Occidental Petroleum (OXY) jumped 5.7%, the most on the S&P 500, after a filing showed Warren Buffett's Berkshire Hathaway (BRK.A, BRK.B) made additional share purchases for almost $52 million.

Seagen (SGEN) shares jumped 5%, the most on the Nasdaq 100, after the company said Monday that Clay Siegall resigned as the company's president, CEO, and member of the board of directors. The resignation comes as a committee of independent directors, with the assistance of an independent law firm, undertaking a thorough investigation into Siegall's conduct. However, the company noted that the resignation had not been driven by findings from the investigation.

Twitter's (TWTR) bot issue likely will be an excuse for its largest shareholder Elon Musk to push for a lower acquisition price or deal termination, Wedbush said Monday. Twitter shares slumped 8.2%.

Gold rose $14.90 to $1,823.10 per ounce, and silver was up $0.61 to $21.62 per ounce. Among energy ETFs, the United States Oil Fund was up 2.3% to $83.13, and the United States Natural Gas Fund was up 4.3% to $27.40.

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