U.S. stocks saw a modest decline at the opening bell on Monday after a round of downbeat data on eurozone manufacturing activity that underlined worries over the health of the global economy.
But losses were limited as Chinese officials played down the significance of the cancellation of visits to U.S. farm states by officials — a move that had dampened sentiment in Friday’s session.
How are markets performing?
The S&P 500 SPX, -0.08% was off 8 points, or 0.3%, to 2,984, while the Dow Jones Industrial Average DJIA, -0.16% retreated 78 points, or 0.3%, to 26,857. The Nasdaq Composite COMP, -0.10% fell 15 points, or 0.2%, to 8,102.
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Major indexes posted moderate losses on Friday but booked gains for the week, with the Dow DJIA, -0.16% logging a 1.1% weekly advance. The S&P 500 SPX, -0.08% rose 0.5% last week, while the Nasdaq Composite COMP, -0.10% rose 0.7%.
Stocks remain within striking distance of all-time highs, with the S&P 500 ending Friday 1.1% below its all-time closing high of 3,025.86 set on July 26. The Dow is off 1.6% from its record close of 27,359.16 set on July 15, while the Nasdaq remains 2.6% away from its all-time settlement high at 8,330.21 from July 26.
What’s driving the market?
The weaker tone followed data that indicated manufacturing activity in the eurozone contracted more sharply in September, posting its worst reading in nearly seven years. The flash eurozone manufacturing purchasing managers index (PMI) fell to an 83-month low of 45.6 in September, down from 47 in August. Economists polled by FactSet had forecast a 47.3 reading — a figure of less than 50 indicates activity declined.
In particular, Germany’s manufacturing PMI gauge fell to 41.4 in September, its worst reading in a decade. The biggest economy in the eurozone has been vulnerable to the deterioration of global conditions, drawing concerns that the export powerhouse will record its second consecutive quarter of negative growth from the June to September period, which would qualify as a technical recession.
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The cancellation of the visits to farms in Montana and Nebraska rattled stocks on Friday, along with remarks by President Donald Trump, who said he wanted a fully-fledged deal with China rather than a limited agreement that addresses particular grievances. But officials said talks would continue, as planned, in October, helping to soothe worries, analysts said.
Bloomberg News reported that Chinese officials had canceled the farm visit at the request of the U.S., and not because of a stalling of trade negotiations.
“At the end of the last week, trade talks were mostly positive with one major exception, the Chinese abrupt cancellation to visit a farm in Montana. While the news, pretty much derailed the last attempt for U.S. stocks to hit fresh record highs, we should not see agricultural purchases be a key hurdle for the Chinese,” wrote Edward Moya, senior market analyst at OANDA.
Investors also took a look at Markit’s take on U.S. activity, with the release of the September purchasing managers index readings for manufacturing and services in the morning. The Chicago Fed’s national activity index recorded a positive reading of 0.1 in August, up from negative 0.41 in the previous month.
Which stocks are in focus?
In company news, Caesars Entertainment Corp. CZR, +1.01% said it reached an agreement to sell the Rio All-Suite Hotel & Casino to a company controlled by a principal of Imperial Companies for $516.3 million. Shares of Caesars were up 0.6%.
California utility PG&E Corp. PCG, +2.33% said it reached an agreement to resolve claims with entities representing 85% of the insurance claims from the 2017 Northern California wildfires and the 2018 Camp Fire. Shares of PG&E were up 2.7%.
What are other market doing?
Global bond yields fell on Monday after investors keyed into weaker-than-expected eurozone data. The 10-year Treasury note yield TMUBMUSD10Y, -1.75% was down 5.2 basis points to 1.701%, while the 10-year German government bond yield TMBMKDE-10Y, -9.95% fell 5.1 basis points to negative 0.569%.
Gold GCZ19, +0.75% rose 0.8% to $1,526.40 an ounce, while the greenback, as measured by the ICE U.S. Dollar Index DXY, +0.18%, a gauge of the dollar against other major currencies, ticked up by around 0.2% to $98.72.
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