NEW YORK (Reuters) — The stock market experienced a downturn on Monday, halting a nine-day streak of gains. The decline was triggered as oil prices plummeted to a four-year low after the OPEC+ coalition disclosed plans to increase oil production.
Monday’s trading saw mostly mixed activity, resulting in a decrease after a series of gains that had previously helped the market recover from its losses due to the ongoing trade war.
The S&P 500 dropped by 36.29 points, or 0.6%, closing at 5,650.38, ending the longest winning streak for the index since 2004. Concurrently, the Dow Jones Industrial Average decreased by 98.60 points, or 0.2%, reaching 41,218.83. The Nasdaq composite fell 133.49 points, or 0.7%, to 17,844.24.
Significant losses were observed among technology companies and leading stocks. Apple lost 3.1%, Amazon saw a 1.9% decrease, and Tesla dipped by 2.4%. Meanwhile, Berkshire Hathaway dropped 5.1% following Warren Buffett’s announcement of his decision to step down as CEO by the year’s end, although he will maintain his role as chairman of the board.
The OPEC+ group, consisting of eight oil-producing countries, announced it would raise its oil output by 411,000 barrels per day as of June 1. This led to a 2% decline in U.S. crude oil prices, which settled at $57.13 per barrel. Historically, producers find it challenging to profit when prices fall below $60, and this steep decline is attributed to concerns over potential economic slowdowns. Consequently, the energy sector experienced significant losses within the S&P 500, with Exxon Mobil losing 2.8%.
The markets continue to grapple with the repercussions of tariffs and the escalating trade war. President Donald Trump’s imposition of tariffs on a diverse range of imports has resulted in retaliatory measures from international trading partners. While some severe tariffs slated for April implementation were delayed for three months, tariffs against China remain unaffected.
This delay has offered temporary relief to Wall Street, yet ongoing uncertainty regarding the present and future impact of these tariffs lingers as a concern for both markets and the broader economy. Ulrike Hoffmann-Burchardi, Chief Investment Officer of Global Equities at UBS Global Wealth Management, noted that uncertainty remains high and could lead to further market fluctuations.
Attention is also turning to the Federal Reserve’s upcoming meeting this week. The Fed is anticipated to maintain its baseline interest rate on Wednesday. Last year, it reduced rates three times before adopting a more cautious approach while considering inflation, which, despite easing, remains slightly above the targeted 2% rate. Fears about potential rekindling of inflation have intensified amidst the trade war fueled by Trump’s tariff policy.
Economic indicators have shown that tariffs and policy uncertainties are affecting the U.S. economy. A 0.3% contraction in the first-quarter marked the first dip in three years. Nonetheless, the economy demonstrates resilience as consumers, while more conservative, continue to spend, and the service sector saw growth in April, as highlighted by a report from the Institute for Supply Management.
Both the service sector data and recent consumer confidence statistics reflect growing worries about the economy’s trajectory. The Fed and markets have been unsettled by Trump’s unpredictable trade policies, where tariffs are repeatedly imposed, withdrawn, or postponed without warning. This unpredictable environment makes it challenging for businesses, households, and economists to project future economic conditions.
In the most recent move in the trade war, Trump announced via his Truth Social platform on Sunday night that he authorized a 100% tariff on movies produced outside the U.S. The implications are uncertain since films typically involve production across various global locations. Due to this announcement, Netflix fell by 1.9%, and Warner Bros. Discovery lagged by 2%.
Meanwhile, the shoe market saw a surge after Skechers announced it was being acquired for $9 billion by the investment firm 3G Capital. This led to Skechers’ stock jumping 24.3%, while Crocs rose by 3.4%, and Deckers Outdoor, the owner of brands such as Ugg and Teva, gained 1.2%.
In the bond market, Treasury yields observed an uptick. The yield on the 10-year Treasury increased to 4.35% from 4.31% at the close of Friday’s trade.