U.S. stock indexes on Monday logged their worst declines in about four weeks, as markets retreated in the penultimate session of 2019, following a powerful stretch of returns, supported in the final few weeks by optimism over an initial trade pact with China.
How are the major benchmarks faring?
The Dow Jones Industrial Average DJIA, -0.64% fell 183.12 points, or 0.6%, to 28,462.14, while the S&P 500 index SPX, -0.58% slipped 18.73 points, or 0.6%, to 3,221.29. The Nasdaq Composite Index COMP, -0.67% retreated 60.62 points, or 0.7%, to close at 8,945.99.
It was the worst trading day in about four weeks for all three indexes. Still, with just one trading day left in 2019, the Dow is on track for a full-year gain of 22%, while the S&P 500 is up 28.5% so far this year. The Nasdaq Composite has jumped nearly 36% in that time.
What’s driving the market?
U.S. equities booked a loss Monday, as investors reassessed the market’s string of recent records. There appeared to be no clear catalyst for the retracement, as upbeat news on an easing of U.S.-China trade tensions continued to trickle in.
Chinese Vice-Premier Liu He is said to be preparing to travel to Washington on Saturday, where he is expected to sign the limited trade deal agreed to earlier this month with the Trump administration, the South China Morning Post reported Monday. The deal will reportedly roll back some tariffs on Chinese imports and involve commitments to purchase more U.S. agricultural goods, while increasing market access for U.S. firms.
“The market is taking some time to catch its breath,” John Conlon, senior portfolio manager and director of equity strategy at People’s United Advisors, told MarketWatch. “We’ve been setting records for several days, so it seems like a good time to take some money off the table and reassess what’s going on,” he said.
Meanwhile, Wall Street experienced seasonally light volumes in another holiday-shortened week, with markets in the U.S. and much of the world set to be closed on Wednesday for the New Year’s Day holiday. Low volume could be contributing to sharpness of losses for stocks, Conlon said.
Global financial markets showed little lasting reaction to U.S. military strikes in Iraq and Syria over the weekend. U.S. forces conducted “precision defensive strikes” against five sites controlled by Kataeb Hezbollah, or Hezbollah Brigades, an Iran-backed Iraqi militia, a Defense Department spokesman said Sunday. The U.S. has blamed the militia for a rocket barrage on Friday that killed a U.S. defense contractor at a military compound near Kirkuk, in northern Iraq.
In economic news, the November trade deficit fell to a more than 27-month low, down 5.4%, though 2019 is on track for the largest annual deficit in 11 years.
A reading of the Chicago-area purchasing managers index for December showed a climb to 48.9 from 46.3. A reading of above 50 indicates improving conditions.
Contracts to buy previously-owned U.S. homes rose in November, according to the National Association of Realtors. Its pending home sales index was up 12% to 108.5.
What stocks are in focus?
Tesla Inc. TSLA, -3.64% shares were down 3.6% Monday after Cowen analyst Jeffrey Osborne said he expects the electric-car company to report fewer car deliveries than it had previously predicted for 2019.
Shares of Myriad Genetics Inc. MYGN, -0.97% fell 1% after the diagnostics company said its BRACAnalysis CDx product was approved by the Food and Drug Administration.
Shares of Nio Inc. NIO, +53.72% soared nearly 54% higher after the Chinese electric vehicle maker reported a narrower loss than expected.
Facebook Inc. FB, -1.77% shares were down after Salesforce.com CRM, -1.54% founder and co-chief executive Marc Benioff sharply criticized the company during a Sunday interview with CNN. He said Facebook was a culprit of society’s “crisis of trust” as a result of their resistance to truth in political advertisements, and that “Facebook is the new cigarettes for our society. It is something that badly needs to be regulated.” Shares of Facebook finished the day down 1.8%, while those for Salesforce declined 1.5%.
Victoria’s Secret parent L Brands Inc. LB, -0.77% shares finished 0.8% lower after an analyst said holiday traffic at the lingerie retailer was the “softest” she’d ever seen.
How are other markets trading?
The yield on the 10-year Treasury note TMUBMUSD10Y, +0.28% rose 2.2 basis points to 1.894%, after slumping to its lowest level in three weeks Friday.
Oil prices edged lower, with the price of a barrel of West Texas Intermediate crude oil CL00, -0.13% down 10 cents to $61.62 on the New York Mercantile Exchange Gold notched its longest string of gains in six months was mostly flat, with December delivery GCG20, +0.40% gaining 50 cents at $1,518.60 on Comex.
The value of the U.S. dollar ticked 0.2% lower against a basket of its peers, as gauged by the ICE U.S. Dollar index DXY, -0.10%.
In Europe, stocks closed mixed. The Stoxx Europe 600 SXXP, -0.85% lost 0.9%, while the FTSE 100 FTSE, -0.95% lost 0.8%.
In Asia overnight, shares traded mixed, with the China CSI 300 000300, +0.09% gained 1.5%, Hong Kong’s Hang Seng Index HSI, -0.39% advanced 0.3%, while Japan’s Nikkei 225 NIK, -0.76% closed 0.8% lower.