On Monday, Wall Street closed lower as investors worried about the precarious financial condition in Greece as well as China’s slowing growth while weaker oil prices impacted energy stocks.
Rallying on the strong jobs data which was released on Friday, U.S. stocks have been trading at expensive valuations historically, which has been motivated by ultra-low costs associated with borrowing.
However, investors took a negative view of Europe as financial ministers met to chat about a Greece cash-for-reforms deal, despite the country’s loan payback of EUR750 million to the IMF (International Monetary Fund).
Also in the spot light with investors was the interest rate cut on Sunday from China, for the 3rd time in six months in a bid to fuel a struggling economy that’s heading for its worst performing year in 25 years.
The ten major sectors of the S&P 500 index (SPX) were down, which was led by the energy index, dropping 2.05%.
Meanwhile, the Dow Jones Industrial Average (DJI) dropped 85.94 points, or 0.47%, ending at 18, 105.17.
While the S&P 500 (SPX) fell 10.77 points, or 0.51%, to 2,105.33, the Nasdaq Composite Index (IXIC) declined 9.98 points, or 0.2% to 4,993.57. Interestingly, Apple (AAPL) was the largest pull down on the Nasdaq as its shares closed 1.02% lower. This came as a result of a reduction in China’s smartphones shipment for the 1st time in 6 years according to IDC market research. Also, according to Thomson Reuters data, the S&P 500 is trading at seventeen times expect earnings compared to its ten-year median average of 15. This index is 0.58% short of its late April’s record high close.
Last Friday’s payroll data for April showed an increase in the U.S. economic growth, however, this might not be enough for the Federal Reserve to implement an interest rate hike earlier than expected.
Added to this on Monday, indications that U.S. production of shale oil was recovering saw a slight drop in U.S. light crude (CLc1).
MT4 Chart: S&P 500
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