A trader works on the trading floor of the New York Stock Exchange (NYSE) in Manhattan, New York City, USA, 5 August 2021.
Andrew Kelly | Reuters
The Dow Jones Industrial Average was lower on Monday amid global growth concerns after the average of 30 stocks hit a record close on Friday.
The Dow fell 80 points, or 0.2%. The S&P 500 lost about 0.1%. Meanwhile, the Nasdaq Composite was up 0.15%.
Oil prices fell on Monday, building on last week’s losses as rising Covid cases raised concerns about a slowdown in demand. West Texas Intermediate crude oil futures were down more than 4% to trade at $ 65.50 a barrel. The contract traded as low as $ 65.15 earlier in the session. The international Brent crude oil benchmark fell 3.8% to $ 68.01 per barrel.
The fall in the price of oil pushed energy stocks lower, while the Energy Select Sector SPDR ETF was down about 1%. Exxon Mobil and Chevron both lost about 1%. Diamondback Energy lost 2.3%.
Stocks tied to the economic recovery, such as cruise lines and airlines, fell on Monday. Norwegian Cruise Line was down nearly 4% after a federal judge ruled the cruise line could ask passengers for proof of COVID-19 vaccination. Carnival and Royal Caribbean also lost more than 3%. American Airline and United Airlines were down 4% and 3.8%, respectively.
“Covid is a heavy burden on the financial markets,” said Jim Paulsen, chief investment strategist of the Leuthold Group. “The surge in cases is putting the most cyclical parts of the stock market under pressure, including cyclical sectors like energy and industrials and small-cap stocks.”
Tesla shares rose 2% after Jefferies upgraded the stock and forecast a rally of more than 20% over the next 12 months.
Berkshire Hathaway B shares rose slightly on a solid earnings report. The conglomerate’s operating income rose 21% year over year to $ 6.69 billion in the second quarter as its countless businesses, from energy to rail, benefited from the economic reopening.
The Dow and S&P 500 closed at record highs on Friday after a strong job report. The Department of Labor said the U.S. economy created 943,000 jobs in July. According to estimates by Dow Jones, economists expected 845,000 new jobs in the past month. The unemployment rate fell to 5.4% and was thus below the expectation of 5.7%.
Job vacancies rose sharply in June, reaching 10.1 million, according to the Labor Department’s JOLTS report released on Monday. This compared to the 9.1 million expected by economists surveyed by the Dow Jones.
The earnings season continues this week, with companies like Tyson Foods, AMC Entertainment, Coinbase, Lordstown Motors, Bumble, Palantir, Disney, Airbnb and DoorDash reporting quarterly earnings.
On Monday, Credit Suisse set a target price of 5000 for the S&P 500 for the end of 2022, citing higher profits. The company kept its target of 4,600 for 2021.
“Over the past five quarters, analysts have significantly underestimated earnings per share, a trend that we expect to continue,” said Jonathan Golub, chief strategist for US equities at Credit Suisse, to his clients. “We see benefits to the estimates as empty shelves are replenished and pricing power is retained. Consumer spending should improve if the unemployment rate continues to fall, accompanied by higher wages. “
Investors are waiting for the key inflation data to be released this week. The consumer price index and the producer price index are to be published on Wednesday and Thursday, respectively.