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Wall Street tumbles as growth stocks and lackluster China data weigh | Business Section

(Reuters) — Major Wall Street indexes fell on Monday as negative data out of China added to concerns about a global economic slowdown amid aggressive policy tightening by the U.S. Federal Reserve.

Chinese and European stock markets fell, while oil fell, with data showing Chinese economic activity cooled sharply in April as Covid-19 lockdowns weighed heavily on consumption, industrial production and employment.

Nine of the 11 major S&P sectors fell in morning trade. Tech and consumer discretionary stocks fell 1.6% and 1.8%, respectively.

Large growth companies such as Amazon.com, Alphabet Inc, Microsoft Corp, Apple Inc, Tesla Inc and Nvidia Corp fell between 1.1% and 2.6%.

Energy stocks outperformed and gained 1.5%.

Wall Street closed sharply higher on Friday, but the S&P 500 and Nasdaq indices still posted their longest weekly losing streaks in more than a decade.

“Investors are just a little bit skeptical. They’re kind of testing the waters to see if the recovery is going to hold or come back down,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.

“We’re clearly not off the hook as far as the economy is concerned. We haven’t seen an inflation peak yet, we can retest those lows and possibly go even lower.”

Investors fear that aggressive interest rate hikes by the Fed to combat decades-high inflation could tip the U.S. economy into recession, the conflict in Ukraine, supply chain issues and latest pandemic-related lockdowns in China exacerbating the situation.

Monday’s data showed factory activity in New York state slumped in May for the third time this year amid a slump in new orders and shipments.

The tech-heavy S&P 500 and Nasdaq have fallen 16.2% and 25.8%, respectively, so far this year, as growth stocks have been hit by fears that larger interest rate hikes interest will affect their future cash flows.

Traders are now pricing in a nearly 86% chance of a 50 basis point Fed hike in June.

As of 9:49 a.m. ET, the Dow Jones Industrial Average was down 231.10 points, or 0.72%, at 31,965.56, the S&P 500 was down 37.13 points, or 0.92%, at 3,986.76, and the Nasdaq Composite was down 148.58 points, or 1.26. %, at 11,656.42.

The focus is now on the retail sales report due on Tuesday, following worrying data on inflation and consumer sentiment last week.

Retailers such as Walmart Inc, Home Depot and Target Corp are due to release their quarterly results this week.

Spirit Airlines jumped 8.2% after JetBlue Airways launched a hostile cash takeover bid for the discount carrier. JetBlue shares slid 3.4%. Shares of rival bidder Frontier Group Holdings gained 3.9%.

Netflix Inc rose 1.4% after Wedbush upgraded the streaming pioneer’s stock to “outperform” from “neutral”.

Falling issues outnumbered advances by a 1.56-to-1 ratio on the NYSE and a 1.42-to-1 ratio on the Nasdaq.

The S&P index recorded a new 52-week high and 29 new lows, while the Nasdaq recorded 10 new highs and 60 new lows.