A broad slide on Wall Street left stocks lower Monday as global financial markets reacted to protests in China calling for President Xi Jinping to step down amid growing anger over severe covid-19 restrictions.
The S&P 500 fell 1.5%, clawing back all of the benchmark index's gains from last week. The Dow Jones Industrial Average finished 1.4% lower, while the Nasdaq composite slid 1.6%.
The world's second-largest economy has been stifled by China's "zero covid" policy, which includes lockdowns that continually threaten the global supply chain at a time when recession fears hang over economies worldwide. The recent demonstrations in China are the greatest show of public dissent against the ruling Communist Party in decades.
The unrest stoked worries on Wall Street that if Xi cracks down even further on dissidents or expands the lockdowns, the move could slow the Chinese economy, which would hurt oil prices and global economic growth, said Sam Stovall, chief investment strategist at CFRA.
"A lot of people are worried about what the fallout will be and basically are using that as an excuse to take some recent profits," Stovall said.
More than 90% of the stocks in the S&P 500 closed in the red Monday, with technology companies the biggest weights on the broader market. Apple Inc., which has seen iPhone production hit hard by lockdowns in China, fell 2.6%.
Banks and industrial stocks also were among the biggest drags on the market. JPMorgan Chase & Co. fell 1.7%, and The Boeing Co. slid 3.7%.
Several casino operators gained ground as the Chinese gambling haven of Macao tentatively renewed licenses. Las Vegas Sands Corp. rose 1.1%, and Wynn Resorts Ltd. gained 4.4%.
The fallout from the collapse of crypto exchange FTX continued. Cryptocurrency lender BlockFi is filing for Chapter 11 bankruptcy protection. Cryptocurrency exchange Coinbase Global Inc. fell 4%, and the price of Bitcoin slipped 2.1%.
All told, the S&P 500 fell 62.18 points to 3,963.94. The Dow dropped 497.57 points to 33,849.46. The tech-heavy Nasdaq lost 176.86 points to close at 11,049.50.
Smaller company stocks fell even more that the broader market. The Russell 2000 slid 38.23 points, or 2.1%, to 1,830.96.
Markets in Asia and Europe fell. The yield on the 10-year Treasury held steady at 3.69%.
Wall Street is returning from a holiday-shortened week that was relatively light on corporate news and economic data. Investors have a busier week ahead as they continue monitoring the hottest inflation in decades and its impact on consumers, business and monetary policy.
Anxiety remains high over the ability of the Federal Reserve to tame inflation by raising interest rates without going too far and causing a recession. The central bank's benchmark rate currently stands at 3.75% to 4%, up from nearly zero in March. Fed officials have warned that the central bank may have to ultimately raise rates to previously unanticipated levels to rein in high prices on everything from food to clothing.
Fed Chair Jerome Powell will speak Wednesday at the Brookings Institution in Washington about the outlook for the U.S. economy and labor market.
The Conference Board will release Tuesday its consumer confidence index for November. That is expected to shed more light on how consumers have been holding up amid high prices and how they plan to spend during the holiday shopping season and into 2023.
The government will release this week several reports about the labor market that are expected to give Wall Street more insight into one of the strongest sectors of the economy.
A report about job openings and labor turnover for October will be released Wednesday, followed by a weekly unemployment claims report released Thursday. The closely-watched monthly report on the job market will be released Friday.
Information for this article was contributed by Elaine Kurtenbach and Matt Ott of The Associated Press.