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Wall Street’s main indexes ended lower Monday amid fears that China could resume stricter measures to fight COVID-19 after it said it faces its most severe test of the pandemic. The TSX closed nearly unchanged as investors absorbed a volatile day in the oil market.

Beijing said on Monday it would shut businesses and schools in hard-hit districts and tighten rules for entering the city, as infections ticked higher.

“There is this fear that China might reinstitute some of the COVID restrictions that they’ve just purportedly started to lift,” said Carol Schleif, deputy chief investment officer at BMO Family Office.

U.S. casino operators with businesses in China including Wynn Resorts Ltd, Las Vegas Sands Corp, MGM Resorts International and Melco Resorts & Entertainment Ltd all fell at least 2%.

Stocks trimmed losses in early afternoon after the San Francisco Federal Reserve President Mary Daly commented that officials need to be careful to avoid a “painful downturn.”

Cleveland Fed President Loretta Mester echoed Daly, saying she supports a smaller rate hike in December.

Last week, multiple Federal Reserve officials reiterated the central bank’s pledge to raise rates until inflation was in check, as investors now await the release of minutes from the Fed’s November meeting on Wednesday.

Traders are widely betting on a 50-basis point hike in the December meeting, with a peak for rates expected in June.

During the session Monday, oil prices tumbled more than 5% after a report that Saudi Arabia and other OPEC oil producers were discussing an output increase. Prices, however, pared losses after Saudi Arabia denied talks about it. U.S. West Texas Intermediate crude futures for December settled at US$79.73 a barrel, down 35 cents.

The Toronto market’s energy sector ended 1.2% lower after having been down as much as 5.1% earlier in the day.

The S&P/TSX composite index ended down 3.78 points at 19,977.13, after falling as much as 193.86 points, or nearly 1%, intraday.

Among individual stock moves, Home Capital Group shares surged 57.1% after the mortgage lender said it would be acquired by Smith Financial Corp in a $1.7 billion deal.

“Smith sees a long term opportunity since Canada is anticipating over half a million immigrants who may not be qualified for mortgages from banks and will look to alternative lenders like Home Capital,” said Barry Schwartz, a portfolio manager at Baskin Financial Services.

On Wall Street, the Dow Jones Industrial Average fell 45.41 points, or 0.13%, to 33,700.28, the S&P 500 lost 15.4 points, or 0.39%, to 3,949.94 and the Nasdaq Composite dropped 121.55 points, or 1.09%, to 11,024.51.

Trading volume was low on Monday, and likely to lessen towards the Thanksgiving holiday on Thursday, leaving markets more prone to volatility. Volume on U.S. exchanges was 9.43 billion shares, compared with the 11.88 billion average for the full session over the last 20 trading days.

Walt Disney Co jumped 6.30% after Bob Iger’s return as chief executive to the entertainment giant.

Among other stocks, Tesla Inc plummeted 6.84% after the electric-car maker said it will recall vehicles in the United States over an issue that may cause tail lights to intermittently fail to illuminate.

Gay dating app Grindr tumbled 46% amid a broader market weakness, after skyrocketing in its debut on the New York Stock Exchange in the previous session.

Declining issues outnumbered advancing ones on the NYSE by a 1.27-to-1 ratio; on Nasdaq, a 1.60-to-1 ratio favored decliners. The S&P 500 posted 9 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 96 new highs and 220 new lows.

Reuters, Globe staff

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