U.S. stock markets opened lower on Thursday as aftershocks from the latest turn for worse in U.S.-China relations and concerns about global supply chains weighed on sentiment.
By 9:50 AM ET (1350 GMT), the Dow Jones Industrial Average was down 266 points, or 0.8% at 32,502 points. The S&P was down 0.6% and the Nasdaq Composite was down 0.7%.
Overnight, the head of a Dutch company contracted to help unblock the Suez Canal said it might “take weeks” to free the stricken Ever Given container ship. That has fed concerns of fresh strains on global supply chains that are already visible in a worldwide shortage of semiconductors and - since the cold snap in Texas - plastics.
Bloomberg reported that 185 ships are currently backed up awaiting entry to the canal, over one-third of them carrying crude oil, liquefied natural gas or other energy and petrochemical products.
To make matters worse, the recriminations over sanctions imposed by the U.S. and other western governments last week on China in respect of alleged human rights abuses in the province of Xinjiang appear to be getting uglier.
Nike (NYSE:NKE) stock was down another 4.8% to its lowest in four months after a blaze of outrage on Chinese social media warned of a boycott of Nike products in response to a statement – made in November – distancing the company from allegations that it profited from slave labor in the province of Xinjiang.
ADRs in Swedish fashion retailer H & M (OTC:HNNMY) were down 3.2% as the government-directed outrage targeted its stores, too.
Even worse was in store for Rite Aid (NYSE:RAD) stock, which fell as much as 20% in early trading after the company reported a weaker-than-expected quarter. Its sales of cold and flu medicines, in particular, suffered as lockdowns stopped the transmission channel of less harmful viruses than Covid-19.
Tesla (NASDAQ:TSLA) stock also fell sharply at the open before bouncing amid fears of redemptions by fund manager Cathie Wood’s ARK Innovation ETF (NYSE:ARKK), where Tesla is the largest holding, accounting for some 10% of assets under management. The move may also have owed something to a 6% slump in Bitcoin prices – with which Tesla has been increasingly correlated since making a $1.5 billion bet on the digital currency with its corporate treasury.
Elsewhere, GameStop (NYSE:GME) stock rebounded 13% after a losing one-third of its value on Wednesday in disappointment at the company's intention to raise more capital to fund its transition to a digital-first retailer.
Earlier, the Labor Department had said that initial jobless claims fell to their lowest since the start of the pandemic last week, although initial claims of 684,000 still indicated a level of layoff still above the post-crash peak in 2008. Investing.com