Stock Markets Retreat: Major Indexes Experience First Decline in 9 Consecutive Days; Energy Sector Plunges Alongside Four-Year-Low Oil Prices
Stocks took a hit on Monday, starting off another week packed with earnings reports, as we edge closer to the Federal Reserve's decision on interest rates. The S&P 500 and tech-heavy Nasdaq plummeted 0.4% and 0.6%, respectively, while the Dow Jones Industrial Average hung tough near zero change.
These three major indices have been enjoying a nine-session winning streak, buoyed by generally strong quarterly results from top companies and optimism that the Trump administration may soften its stance on tariffs. This latest winning run is the longest since 2004 and has allowed the S&P 500 to regain all the losses suffered after President Trump’s announcement on April 2 of steep tariffs on major trading partners, particularly China.
However, concerns persist about the potential impact that the import taxes could have on the economy and corporate profits. With the two-day meeting of the Fed's policy committee due to start tomorrow, investors will be keeping a close eye on the proceedings. Trump has urged Fed Chair Jerome Powell to cut rates, while the central bank needs more clarity on how the tariffs are feeding through the economy before making any adjustments.
Berkeley Hathaway shares dove nearly 5% in early trading on Monday following Warren Buffett’s announcement on Saturday that he would be stepping down as CEO after a staggering 6 decades at the helm of the company.
Shares of technology heavyweights were mixed this morning. Apple and Tesla both plummeted more than 3%, while Amazon, Nvidia, and Broadcom were each down about 1%. Microsoft, Alphabet, and Meta Platforms were on the upswing.
On the earnings front, meat processor Tyson Foods plunged 10% to lead S&P 500 decliners, while On Semiconductor fell 8% to top the Nasdaq's drop. Palantir shares crept down around 0.5% ahead of the scheduled release after today's close of the AI software firm’s earnings report.
Oil prices tanked Monday, with OPEC+ agreeing yet again to boost output in June. The decision raises worries about a potential surplus at a time when markets face confusion from the global trade war. Brent crude futures were recently at $59.90 per barrel, while West Texas Intermediate futures, the U.S. benchmark, were at approximately $56.80, both down over 2%.
The S&P 500's energy sector index was down 1.5%, the biggest drop of any sector in the benchmark index on Monday.
In additional news, the president surprised the movie industry and media giants like Disney and Netflix by authorizing a 100% tariff on movies made overseas. Shares of Disney, reporting earnings on Wednesday, slid 1%, while Netflix shares fell 3%. Warner Bros. Discovery and Paramount Global each dropped more than 1%.
Trump called tax incentives that lure American movie production overseas a "national security threat" and stated that the tariffs on all movies produced in "foreign lands" would commence immediately.
Netflix and Disney did not immediately respond to requests for comment. Industry experts expressed surprise by the announcement, as it's unclear what exactly the tariffs would entail. The movie industry, according to the Motion Picture Association, generated a positive balance of trade in every major market in the world.
Meanwhile, Berkshire Hathaway shares retreated in premarket trading on Monday following legendary investor Warren Buffett's announcement on Saturday that he plans to step down as CEO at the end of the year. Buffett, who has been in charge for 60 years, will pass the torch to Vice Chairman Greg Abel, who has long been identified by Berkshire as Buffett's successor.
Berkshire shares soared to a fresh record high on Friday before Buffett's announcement on Saturday. By last week's close, the stock had gained 19% since the beginning of the year and surged 35% over the past 12 months. This outperforms the benchmark S&P 500, which has lost 3% since the start of the year and added 11%, respectively, over the same periods.
Berkshire shares broke out above the upper trendline of an ascending triangle in Friday's trading session, indicating a possible continuation move higher. The relative strength index (RSI) confirms bullish momentum with a reading above the 50 threshold, though the indicator sits below overbought levels. Measured move and bars pattern upside targets on Berkshire's chart sit at $585 and $606, while critical support levels lie at $519 and $490.
The stock was down about 3% at $524 ahead of Monday's opening bell.
Market participants will keep a close watch on the potential impact of tariffs on industries and individual stocks, while the focus also remains on the upcoming Fed meeting to determine the direction for the nation's monetary policy. As always, the world of finance is a wild and unpredictable rollercoaster ride, offering no shortage of excitement and opportunities for the savvy investor.
- Despite the continuous winning streak of stock markets, concerns about tariffs' impact on the economy and corporate profits persist, with investors monitoring the Federal Reserve's upcoming decision on interest rates closely.
- Warren Buffet's announcement to step down as CEO of Berkshire Hathaway caused a decline in the company's shares, with shares diving nearly 5% in early trading on Monday.
- In the world of technology, shares of Apple, Tesla, and several other heavyweights took a hit on Monday, with each company's stock plummeting more than 3%, while shares of Microsoft, Alphabet, and Meta Platforms witnessed an upswing.
- In an unexpected move, President Trump authorized a 100% tariff on movies made overseas, causing shares of media giants like Disney and Netflix to slide 1% and 3%, respectively, while industry experts are left questioning the tariffs' specifics and potential consequences.
