The stock market moved higher on Monday despite disappointing economic data out of China leading to rising concerns about a global recession and a drop in oil prices; meanwhile, investors are looking ahead to a big week of retail earnings.
Stocks rose after four straight weeks of gains: The Dow Jones Industrial Average was up 0.5%, around 150 points, while the S&P 500 gained 0.3% and the tech-heavy Nasdaq Composite 0.5%.
Markets were initially lower after weak economic data from China overnight, with the country’s consumer and factory data coming in well below expectations, while China’s central bank also unexpectedly slashed interest rates amid a slowing economy.
As China’s real estate slump and Covid lockdowns continue to weigh on economic growth, investors are growing concerned about what that could mean for the global economy, reigniting recession fears.
Oil prices tanked on Monday as the news out of China raised concerns about a potential demand slowdown: The price of US benchmark West Texas Intermediate fell nearly 4% to $89 per barrel, while international benchmark Brent crude is now trading at over $94 per barrel.
The China data “doesn’t bode well for oil demand especially when the country remains so committed to zero Covid,” says Oanda senior market analyst Craig Erlam, who predicts, “with cases continuing to rise, the downward pressure on oil prices could intensify .”
Investor sentiment also took a hit after the New York Fed’s Empire State Manufacturing Survey showed a sharp decline in manufacturing activity for August, with a reading of –31.3, the lowest since May 2020.