Investors have had a rough ride throughout most of 2022, and Monday was no exception. As markets were impacted by Chinese social unrest over the protracted COVID limits, stock markets dropped.
Demonstrations erupted over the weekend in mainland China, and people voiced their displeasure with Beijing’s zero-COVID policy. Earlier this month, Beijing adjusted some policies that suggested the world’s second-biggest economy was on its way to reopening. But local governments tightened COVID controls as cases surged.
In Monday trading, the developments immediately impacted global stock markets, with WTI crude futures falling to their lowest price since December. Yet, the market is up in the fourth quarter.
In October, the Dow had its best month since May 1966, gaining almost 3% in November. For 2022, the chip index is only about 7% lower than its previous all-time high. Boeing (BA), Caterpillar (CAT), and Honeywell (HON) are among the Dow’s top industrial corporations that have increased. Walgreens (WBA), Home Depot (HD), and Nike (NKE) are all retail/consumer giants, as are Goldman Sachs (GS) and JPMorgan Chase (JPM). In 2022, the S&P 500 and Nasdaq are down by 17% and over 30%, respectively. Monday, both indexes were down more than 1.5%. In recent weeks, many stock indexes have recovered from their year-to-date lows.
Investors are digesting a slew of economic data that will be released later this week. This will provide more insight into the status of the United States. Market observers anticipate more volatility ahead. The personal consumption expenditures estimate is a key measure of inflation for the Federal Reserve. It will be released along with the payroll estimate on Friday.
Investors will pay close attention to remarks from Fed Chairman Jerome Powell and other monetary authorities for indications of what future rate rises might entail as the monetary authority strives to cool prices.
Economic & Social Turmoil in China Affecting Apple’s Productivity
Apple’s stock fell by around 2% in the first hours of Monday, extending Friday’s declines. The zero-COVID policy in China has been a source of issues for the tech giant. COVID-related constraints have caused unrest among Chinese employees at a crucial manufacturing site in Zhengzhou, where Apple and its Foxconn manufacturing partner have faced difficulties. To secure the employees it requires to keep the plant operating at acceptable efficiency, Foxconn has pledged enormous incentives. Apple has relied on Zhengzhou for supplies of its latest iPhone 14 Pro and Pro Max lines of smartphones, marking it the biggest iPhone factory in the world.
In addition, if lockdowns persist in the region, there is a chance of further iPhone production shortfalls. In the long term, Apple expects to compensate for lost manufacturing in 2023. Many consumers, however, will have to wait until next year to purchase Apple products. Furthermore, as Apple’s situation demonstrates that supply chain pressures are still present, it has broader implications for the rest of the industry.