Stocks of companies whose profits are most closely tied to the strength of the economy dropped to the market’s worst losses. That included the oil-and-gas industry, as the price of crude tumbled on worries about weaker demand growth for fuel. Iron ore prices also retreated.
Halliburton dropped 5.3 per cent, and Exxon Mobil fell 2.4 per cent. They sank as the price of a barrel of US oil dropped 3.5 per cent. Brent crude, the international standard, lost a similar amount despite moves over the weekend by Saudi Arabia and other oil-producing countries meant to prop up its price.
A technical issue caused the temporary halt in trading for dozens of stocks listed on the New York Stock Exchange, including at least one whose price briefly fell nearly 100 per cent.
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Berkshire Hathaway, the company run by famed investor Warren Buffett, saw its A-class shares plunge 99.97 per cent to $US185.10 from Friday’s closing price of $US627,400, before its trading was halted. After the shares later resumed trading, they immediately recovered all those losses and shot toward $US700,000.
On the winning side of Wall Street were some big technology stocks that keep flying regardless of what the economy is doing.
Nvidia climbed another 4.9 per cent to bring its gain for this year to 132.2 per cent after unveiling new products and services over the weekend. It’s been delivering blowout profits to keep at bay criticism that investors have become overzealous about the prospects for AI. Nvidia was by far the strongest force pushing the S&P 500 upward.
The jump was even bigger in another corner of Wall Street well accustomed to stomach-churning swings, both up and down.
GameStop soared 21 per cent in a move reminiscent of its early 2021 rocket ride that shook Wall Street and brought the term “meme stock” into the parlance of our times. GameStop jumped after a Reddit account associated with a central character in the 2021 episode said it had built a stake of 5 million shares, along with options to buy more.
The post made tidal waves online because it came from the same Reddit account that showed similar screenshots of big GameStop holdings in 2021 that helped the struggling video-game retailer’s stock price rocket higher, way beyond what many critics on Wall Street called rational.
“Meme stock” has become the way to describe companies whose prices move more on the enthusiasm of smaller-pocketed investors than on any fundamental change in their business prospects. Other meme stocks also rose on Monday, including an 11.1 per cent climb for AMC Entertainment.
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In the bond market, the yield on the 10-year Treasury fell to 4.39 per cent from 4.50 per cent late Friday. The two-year yield, which more closely tracks expectations for action by the Federal Reserve, fell to 4.81 per cent from 4.88 per cent.
The hope among investors is for the US economy to hit a precise bull’s eye where it slows enough to keep pressure off inflation but not so much that it causes a recession. That in turn could allow the Federal Reserve to cut its main interest rate.
The Fed has been keeping the federal funds rate at the highest level in two decades, which intentionally slows the economy and hurts investment prices in hopes of getting high inflation fully under control.
This upcoming week has several high-profile economic reports that could send yields on additional sharp swings.
On Tuesday, the US government will show how many job openings employers were advertising at the end of April. And on Friday, it will give the latest monthly update on overall growth for jobs and workers’ wages.
In other international stock markets, India’s Sensex jumped 3.4 per cent after the country’s 6-week-long national election came to an end with most exit polls projecting that Prime Minister Narendra Modi will extend his decade in power with a third consecutive term.
Stocks in Mexico, meanwhile, slumped 6 per cent after Claudia Sheinbaum claimed victory in that country’s presidential election.
Elsewhere in the world, stock indexes were higher across much of Europe and Asia, though Shanghai and London were exceptions.