Goldman Sachs cuts China growth forecast

U.S. stock indexes struggled for altitude Monday, with the spread of the delta coronavirus variant and a downgrade of China growth by Goldman Sachs denting bullish sentiment on Wall Street.

However, all three equity benchmarks remain near all-time highs.

Where are stock markets trading now?

• The Dow Jones Industrial Average DJIA, -0.19% traded 0.2% lower to 35,126, off 80 points.
• The S&P 500 index SPX, -0.09% fell 7 points, or 0.2%, to 4,429.
• The Nasdaq Composite Index COMP, 0.16% was trading at 14,818, off 18 points.

On Friday, the Dow rose 144.26 points, or 0.4%, to a record 35,208.51. The S&P 500 added 7.42 points, or 0.2%, to a record 4,436.52. The Nasdaq Composite Index fell 59.36 points, or 0.4%, to 14,835.76.

For the week, the Dow gained 0.8%, while the S&P 500 advanced 0.9% and the tech-heavy Nasdaq rose 1.1%.

What’s driving the markets?

Markets were wavering between small gains and losses early Monday as investors struggled to find fresh reasons to push major averages further into record territory.

A better-than-expected July employment report, with 943,000 new jobs created and the unemployment rate falling to 5.4% from 5.9%, drove records for the Dow industrials and the S&P 500 on Friday. That briefly helped offset concerns surging COVID-19 cases, driven by the delta coronavirus variant, will slow economic growth.

“With the market focus on jobs over for now, the short-term direction of markets could be dictated by U.S. inflation — the other part of the Fed’s mandate — with July CPI due on Wednesday,” said Steen Jakobsen, chief investment officer at Saxo Bank, in a note to clients.

Stocks remained slightly lower after data Monday morning showed U.S. job openings rose to a record 10.1 million in June.

Fresh worries were emerging on Monday, with Goldman Sachs downgrading its China growth forecasts due to the country’s efforts to contain a small but growing number of COVID-19 cases in several regions. The bank cut its third-quarter growth outlook to 2.3% from 5.8%, but lifted its fourth-quarter outlook to 8.5% from 5.8% previously. That leaves its full-year 2021 projection at 8.3% from 8.6% previously.

Beijing has reportedly punished 30 officials across the country for lax attitudes and response in containing the virus, according to the state-backed Global Times. Meanwhile, fresh data showed producer prices climbing 9.0% from a year earlier, faster than an 8.8% increase in June, according to the National Bureau of Statistics Monday.

Concerns over China growth didn’t help oil prices, which extended sharp losses from Friday. Crude for September delivery CLU21, -2.75% fell $2.79, or 4%, to $65.49 a barrel. Brent oil BRN00, -2.50% fell $2.91 or 4.1%, to $67.78 a barrel.

Meanwhile, Senate Democrats on Monday released the text of a budget resolution that would allow them to pass their $3.5 trillion package focused on “human infrastructure,” climate change and other Democratic priorities. The Democratic-run Senate is aiming to take a two-step approach to big spending, with the $3.5 trillion package advancing by a simple majority vote through a process known as budget reconciliation after the chamber passes a $1 trillion bipartisan infrastructure package.

Which companies are in focus?

• DraftKings Inc. DKNG said Monday it has entered an agreement to acquire Golden Nugget Online Gaming Inc. GNOG in an all-stock deal valued at about $1.56 billion. 
• Shares of Sanderson Farms Inc. SAFM, 7.28% rose 7% after the chicken producer confirmed an agreement to be bought by a Cargill and Continental Grain Co. joint venture in a deal valued at $4.53 billion.
• Air Products & Chemicals Inc. APD reported Monday fiscal third-quarter profit that came up short of expectations while revenue beat, and lowered the midpoint of its full-year outlook.
• Impossible Foods Inc. will publicly announce a new chief financial officer and lead human-resources executive Monday as chatter about a possible IPO for the plant-based meat maker continues to sizzle.
• Shares of Bluebird Bio Inc. BLUE were down on Monday after the company announced several setbacks to its business as part of its second-quarter earnings announcement.
• Shares of Norwegian Cruise Line Holdings Ltd. NCLH, -2.09% declined 4%, roughly in line with the stocks of the cruise operator’s peers, after a federal judge sided with Norwegian in its fight Florida’s rule that businesses can’t require proof of COVID-19 vaccination.
• Tyson Foods Inc. TSN stock rose 2.3% in Monday trading after the meat manufacturer reported fiscal third quarter earnings and sales that beat expectations.
• Shares of Workhorse Group Inc. WKHS slid 3.5% Monday, after the electric-vehicle maker reported second-quarter sales that rose much less than expected. 
• Hertz Global Holdings Inc. HTZZ reported Monday second-quarter profit and sales that more than doubled from a year ago, citing strong leisure travel demand and tighter fleet inventory, in the auto rental company’s first quarterly report since emerging from bankruptcy on June 30.

How are other assets faring?

• The yield on the 10-year Treasury note TMUBMUSD10Y fell 1.4 basis points to around 1.28%. Yields and debt prices move in opposite directions.
• The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was down by about 0.1%.
• Oil futures CL00 for the U.S. benchmark traded 2.7% lower at $66.47 a barrel, while gold was also extending a sharp drop from late last week, with December futures GCZ21 down $17.30, or 1%, to $1,745.60 an ounce, and tumbling as low as $1,672.80 in Asian trading.
• In European equities, the Stoxx Europe 600 SXXP gained less than 0.1%, while London’s FTSE 100 UKX was down but nearly flat.
• In Asia, the Shanghai Composite SHCOMP fell 1.1% and the Hang Seng Index HSI rose 0.4%, while markets in Japan were closed.