Stock Market Today: Nasdaq Snaps Win Streak as Twitter Drags on Tech
Twitter stock sold off on news Elon Musk no longer wants to buy the social media platform.
Stocks closed lower on Monday following weekend reports that China initiated a new round of restrictions to combat rising cases of COVID-19.
The directives included a week-long shutdown of non-essential businesses in the Chinese gambling hub of Macau, which sent casino stocks tumbling. Wynn Resorts (WYNN, -6.5%) and Las Vegas Sands (LVS, -6.3%) were among the notable decliners.
The news out of China also weighed on oil prices, with U.S. crude futures shedding 0.7% to end at $104.90 per barrel.
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"Oil prices are weakening as crude demand outlook is hit by a one-two punch from China's rising COVID cases and Wall Street jitters that inflation is hitting the U.S. economy much harder than analysts were expecting," says Edward Moya, senior market strategist at currency data provider OANDA. "Oil will struggle to hold the $100 level if China's COVID situation deteriorates much further."
In terms of the sector logging the worst performance to kick off the trading week, that distinction easily went to communication services, which fell 3.0% amid an 11.3% drop in Twitter (TWTR) stock. Shares in the social media platform were hit by reports that Tesla (TSLA, -6.6%) CEO Elon Musk will terminate his $44 billion purchase of Twitter.
TWTR's decline bled into other sectors, with Alphabet (GOOGL, -3.1%), Amazon.com (AMZN, -3.3%) and Meta Platforms (META, -4.7%) all chalking up big losses.
The widespread selling snapped the Nasdaq Composite's five-day win streak, as the tech-heavy index finished off 2.3% at 11,372. The S&P 500 Index declined 1.2% to 3,854 and the Dow Jones Industrial Average retreated 0.5% to end at 31,173.
Other news in the stock market today:
- The small-cap Russell 2000 slumped 2.1% to 1,732.
- Gold futures declined 0.6% to finish at $1,731.70 an ounce.
- Bitcoin shed 6% to $20,497.90. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
- Lululemon Athletica (LULU) fell 4% after Jefferies analyst Randal Konik downgraded the yoga apparel maker to Underperform (Sell) from Hold. The analyst cited concerns over LULU's "sky high" sales per square feet, as well as rising competition in an increasingly crowded space. "We believe there is limited upside ahead, especially as recession risks rise, and there is uncertainty as it relates to the performance of footwear and MIRROR [LULU's home gym], limiting visibility," Konik says.
Another Inflation Update on Deck
So, what's in store for this week? A lot, that's for sure. In addition to the start of second-quarter earnings season, inflation data will remain front and center. The Labor Department will release its consumer price index (CPI) for June on Wednesday morning, with last month's red-hot reading (CPI rose 8.6% year-over-year, the fastest annual pace since December 1981) still fresh on investors' minds.
Regardless of what happens, Tony DeSpirito, CIO of BlackRock's U.S. Fundamental Active Equities, believes that it's best to take a more defensive positioning. "This includes owning energy and financials," DeSpirito says, while also adding "healthcare for a dose of resilience."
Indeed, healthcare stocks are especially helpful as an inflation hedge becaue they can pass higher prices along to consumers. Read on as we explore a dozen healthcare names that are poised to do well in almost any market condition.
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