Stocks retreated Monday as manufacturing data overseas raised fresh fears of slowing economic growth, while a disappointing Black Friday weekend weighed on U.S. retailers.
The Nasdaq Composite saw its steepest drop in seven weeks, dragged down by big declines in tech giants such as Apple, Inc.,Google Inc.,Facebook Inc., and Alibaba. Energy and utility stocks were the only bright spots on Wall Street, rising in tandem with a spike in oil prices.
Two factory readings in China showed only modest expansion for November, while similar readings for Germany, France and Italy indicated contraction, The Wall Street Journal reported.
The weak readings spurred declines in U.S. industrial stocks and other shares tied to economic output.
Elsewhere Monday, retail stocks posted sharp losses following disappointing Black Friday sales. Retail spending over the Thanksgiving weekend fell 11%, according to the main industry trade group, a sign that early deals are losing their allure.
The weak turnout came as a surprise to many investors, who had been betting that an improving economy and falling gasoline prices would pad retailer profits during the holiday shopping season. Many analysts attributed the poor showing to heavy discounts ahead of Black Friday.
Gold prices saw a massive rebound Monday and hit a five-week high, after prices overnight scored a three-week low. The huge daily trading range in gold prices was the largest in years. Several factors worked to support gold Monday, including heavy short covering and bargain hunting. A weaker U.S. dollar index and a bounce in crude oil prices Monday were also featured to start the trading week and the first trading day of the month. News that Moody’s cut the Japanese government’s credit rating was credited with prompting some safe-haven demand for gold, especially from Asian investors.
The dollar fell against the yen and the euro on Monday as lower oil prices softened inflation expectations, making investors cautious about the prospects of an increase in U.S. interest rates.
Later in the week, investors will shift their focus to Thursday’s European Central Bank meeting, with expectations rising that officials with signal intentions to expand their asset-purchase program in a bid to jump-start the region’s flagging economy, according to The Wall Street Journal.