U.S. stocks opened lower Monday as investors remained cautious heading in to the start of the week amid a series of headwinds to global growth that could test the Federal Reserve’s policy stance in the months ahead.
China’s regulatory crackdown, the ongoing crisis linked to indebted property developer Evergrande and a rolling power crunch, which has lead to a spike in energy costs around the world, are both testing investors’ appetite for risk while boosting inflation forecasts heading into the Fed’s November policy meeting
Those pressures, alongside myriad warnings from U.S. companies that supply chain disruptions, elevated shipping costs and notably higher wages will eat into near-term profit margins, are taking the steam out of major markets around the world. In the meantime, the Fed’s preferred inflation gauge, the core PCE Price Index, surged 3.6% in August, the highest in three decades.
European stocks, in fact, are trading 5% south of their August record highs, extending declines Monday from their worst week since February, while stocks in Asia are struggling to find momentum amid the week-long Golden holiday closures in China.
On Wall Street, the Dow Jones Industrial Average bumped 60 points higher, thanks in part to solid gains for Exxon Mobil and Chevron as oil prices surged to fresh seven-years highs on reports that OPEC will rollover its planned production boost of 400,000 barrels per day, but gave back those gains to fall 40 points by the opening half-hour.
The broader S&P 500 was marked 13.5 points lower while the Nasdaq Composite fell 170 points as benchmark 10-year note yields rose past the 1.5% marked in early New York trading and shares in Facebook tumbled 3.4%.
Merck shares, which ignited a solid Friday rally after it published promising data from its late-stage COVID treatment trial, extended its own gains Monday, rising 3.4% to $84.20 each, on the back of a series of price target upgrades linked to an estimated $10 billion revenue boost from the antiviral drug.
General Motors shares surged 34.5% after activist investor Engine No 1, the hedge fund that successfully pushed for board changes at Exxon, said its built a stake in the biggest U.S. carmaker.
Tesla shares were also active, rising 2.8% to $796.72 each after the clean-energy carmaker posted record third quarter deliveries of 241,300 vehicles over the weekend.
Facebook fell 3.4% to $331.50 each following an interview on CBS’s ’60 Minutes’ last night with whistleblower Frances Haugen.
Oil prices surged higher again Monday, taking Brent crude back towards the $82 per barrel mark, ahead of today’s meeting of OPEC ministers in Vienna where the cartel is expected to agree a rollover of its 400,000 barrels per day production boost.
WTI futures for November delivery traded $2.44 higher on the session at $78.30 per barrel while Brent contracts December, the global pricing benchmark, were $2.69 higher at $81.398 per barrel.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, eased 0.25% from its 2021 highs to trade at 93.789.
This article was originally published by TheStreet.