“The blame rests partly with China’s Covid-19 outbreak, which has led to manpower shortages and bottlenecks in the logistics sector,” Julian Evans-Pritchard, senior China economist at Capital Economics, wrote in a note to clients. “But the extent of these disruptions shouldn’t be overplayed.”
The retreat on Wall Street followed sharp declines in global markets. The Stoxx Europe 600 fell 2.9 percent, while Hong Kong’s Hang Seng Index slid 3.8 percent.
Oil prices also slumped. Brent crude, the global benchmark fell about 2.6 percent to $109.43 a barrel, and West Texas Intermediate, the U.S. benchmark, was down 2.8 percent, to about $106.65.
Stocks have been battered for the past several weeks as investors contend with higher interest rates, which the Federal Reserve began to raise from near zero in March, and further disruptions to supply chain. The S&P 500 is coming off its fifth consecutive weekly decline, its longest streak of losses since June 2011.
“Investors are worried about growth slowing and the economy falling into a recession,” Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, wrote in a note. “We believe the salve to investor fears in the near term, and the key to equity markets reversing their fortune at least temporarily, is clear improvement on inflation dynamics.”
That improvement may begin to appear later this week, with the Labor Department releasing fresh data on consumer prices on Wednesday. Inflation reached 8.5 in March, its fastest pace in over 40 years, with fuel and food driving prices higher, and economists expect prices gains to have slowed slightly in April.
Bond yields, a proxy for investor expectations about interest rates, were little changed on Monday. The yield on 10-year Treasury notes remained at 3.1 percent.