Stock Market Slumps after 9-Day Winning Streak, with Crude Oil Prices Declining as Well
Wall Street Sees a Downturn Amid OPEC+ Decision and Trade War Uncertainties
New York -Wall Street experienced a slump on Monday, putting an end to a remarkable nine-day winning streak, as oil prices plummeted to a four-year low following OPEC+'s plan to escalate production.
The day was rather serene, with modest trading fluctuations. This came after several weeks of advancements that managed to erase losses stemming from the prolonged trade war.
The Standard & Poor's 500 index fell 36.29 points, or 0.6%, to 5,650.38, snapping the index's longest winning streak since 2004.
The Dow Jones industrial average dropped 98.60 points, or 0.2%, to 41,218.83. The Nasdaq composite fell 133.49 points, or 0.7%, to 17,844.24.
The tech sector and other heavy-hitting stocks exerted significant pressure on the market. Apple slid 3.1%, while Amazon fell 1.9% and Tesla dipped 2.4%.
Berkshire Hathaway slid 5.1%. The news of legendary investor Warren Buffett stepping down as CEO by year's end after six decades at the helm added to investor apprehension. Buffett will still serve as chairman of the board of directors.
OPEC+, an alliance of eight oil-producing nations, announced plans to lift output by 411,000 barrels a day, effective June 1. U.S. crude oil prices tumbled 2% to $57.13 per barrel, causing concern for many producers forced to operate at a loss when oil dips below $60.
Trade tensions and the ongoing trade war have led to market instability. President Trump has levied import taxes on a multitude of products, prompting retaliation from global trading partners. Delays of the harshest tariffs initially set for April have afforded some relief but have also increased uncertainty over their consequences.
The lack of certainty about the impact of both existing and upcoming tariffs continues to cast a shadow over the markets and the economy.
Ulrike Hoffmann-Burchardi, chief investment officer of global equities at UBS Global Wealth Management, commented, "Uncertainty remains elevated, and economic data will likely weaken in the coming months, implying further volatile swings are probable."
This week's Federal Reserve meeting will likely be overshadowed by the prevailing uncertainty. The Fed is predicted to maintain its benchmark interest rate during its Wednesday meeting, as concerns over inflation remain evident.
The economy has displayed some indications of being affected by the trade war and its associated uncertainties. The U.S. economy shrank 0.3% in Q1, marking the first decline since 2019.
Despite this, the economy continues to show resilience, with consumers remaining cautious but persistent in their spending. Activity in the services sector continued to expand in April, as indicated by a survey from the Institute for Supply Management.
The services sector survey and the latest consumer confidence reports both underscore concerns about the economy's trajectory, as Trump's shifting trade policies create ongoing turmoil.
Tariffs have been announced, only to be retracted or postponed at times, which has left businesses, households, and economists in a quandary when it comes to predicting the economy's trajectory and making appropriate plans.
The most recent development in the trade war came on Sunday night via a post on Trump's Truth Social platform, in which he declared that he has authorized a 100% tariff on movies produced outside of the U.S. The true impact of this measure is uncertain, as films often involve international production locations.
Netflix and Warner Bros. Discovery dipped 1.9% and 2%, respectively.
Meanwhile, shoemakers experienced gains following the announcement that Skechers would be acquired for $9 billion by investment firm 3G Capital and taken private. Skechers soared 24.3%, Crocs rose 3.4%, while Deckers Outdoor, owner of the Ugg and Teva brands, increased 1.2%.
Treasury yields increased. The yield on the 10-year Treasury climbed to 4.35% from 4.31% in the previous weekend.
Troise provides reporting for the Associated Press.
Additional Readings
U.S. stocks sink again as uncertainty continues about Trump's tariffs
U.S. stocks plummet as euphoria on Wall Street turns to fear over U.S.-China trade war
International stocks and the dollar stumble as investors retreat further from the United States
- The slump in Wall Street, ending a remarkable nine-day winning streak, coincides with OPEC+'s decision to increase production and subsequent drop in oil prices.
- The tech sector, including Apple, Amazon, and Tesla, exerted significant pressure on the market during Monday's trading.
- The decision by OPEC+ to boost output by 411,000 barrels a day, effective June 1, has caused concern for many oil producers who struggle to operate at a profit when oil prices fall below $60.
- Uncertainty about the impact of both existing and upcoming tariffs, such as those on movies produced outside of the U.S., continues to cast a shadow over the markets and the economy.
- Despite the slump in Wall Street and the ongoing trade war, the economy continues to display resilience, with consumers remaining cautious but persistent in their spending.
- The Federal Reserve is expected to maintain its benchmark interest rate during its upcoming meeting, as concerns over inflation remain evident, but the ongoing uncertainty stemming from trade policies may overshadow this meeting.
