Dow drops about 300 points as April sell-off continues, global slowdown fears loom

The Dow Jones Industrial Average fell Monday, continuing an April market sell-off that has pushed the index lower for four straight weeks.

Fear about a global economic slowdown loomed as Asian stock markets cratered Monday amid concerns about Covid case spikes in China. Oil prices declined and yields retreated on the fears.

Wall Street is also bracing for a stacked week of earnings, including reports from major technology companies like Amazon and Apple.

The Dow fell about 300 points, or 1%. The S&P 500 retreated 1.1%. The Nasdaq Composite dipped 0.4%.

“Stocks are kicking off the week deeply in the red as all the anxiety and negativity from Thurs/Fri carried over the weekend,” wrote Adam Crisafulli of Vital Knowledge in a note to clients. “The dramatic shift in [central bank] tightening expectations last week remains a huge overhang, but China is quickly rising the top of the list of market fears as COVID shutdown concerns spread to Beijing.”

China’s Shanghai composite dropped more than 5% on Monday as China struggles to contain a Covid breakout in Shanghai. Beijing reported a spike in cases over the weekend.

Fears of a global slowdown send oil prices lower. WTI crude fell more than 5% back below $100.

Energy shares retreated, comprising the worst-performing S&P 500 sector Monday. Chevron fell more than 3% and Exxon Mobil lost more than 5%.

The 10-year Treasury yield, which has undergone a rapid rise this year that has worried investors, dropped more than 12 basis points to below 2.8% (1 basis point equals 0.01%).

Some technology shares were a bright spot in the market, rising as interest rates fell. Google-parent Alphabet shares nearly 2% and Microsoft was marginally higher.

Investors are watching Twitter as well, which reportedly is re-examining Elon Musk’s takeover bid. The social media company is nearing a deal to sell itself to the billionaire investor, The New York Times reported, citing unnamed sources. Twitter shares were more than 3% higher.

Coca-Cola shares were marginally higher after the company reported better-than-expected quarterly earnings before the bell Monday.

About 160 companies in the S&P 500 are expected to report earnings this week, and all eyes will be on reports from mega-cap tech names, including Amazon, Apple, Alphabet, Meta Platforms and Microsoft.

“This week may easily be a fork in the road of equities. We have nearly a third of the S&P 500 and half of the Dow Jones set to report. Bottom-up drivers will either confirm or reject what the challenging macro backdrop has given us over the last three weeks,” MKM’s JC O’Hara said in a note.

After a late March comeback, stocks returned to their losing ways in April. The Dow is coming off its worst one-day performance since October 2020 on Friday, dropping more than 900 points and marking the Dow’s fourth straight weekly loss. For the week, the S&P 500 and the Nasdaq are fresh off three straight losing weeks.

The Nasdaq Composite is down about 10% for the month, while the S&P 500 and Dow are off by around 6% and 3% respectively. The S&P 500 is back in correction territory, down roughly 12% from its high. The Nasdaq is off by more than 21% from its record.