Stocks decline on long-term growth prospects

Weak China data has added to growing pessimism.

Stocks fell and gold climbed to a six-month high as data showed a sharp slowdown in China’s industrial profits, which reinforced investor concerns about its sluggish economy.

The Stoxx 600 index fell 0.3% and Nasdaq futures retreated 0.2%. Treasury 10-year yields climbed as much as five basis points to 4.51%, the highest in more than a week. Gold climbed to the highest since May, while the dollar was little changed.

A slowdown in China’s industrial profit growth added to concern about deflation in the world’s second-largest economy. Fresh economic data this week will help traders gauge whether the gains for stocks and bonds seen so far this month can extend into December. Statistics include euro-zone inflation figures, China PMIs and US personal consumption numbers on Thursday, and US and euro-area PMIs on Friday.

“There’s not much fundamental reason for high market optimism,” said Ulrich Leuchtmann, head of currency strategy at Commerzbank AG. “A lot of clients I am talking to are getting more pessimistic about long-term growth prospects.”

The cautious start comes despite the VIX index, known as Wall Street’s “fear gauge,” falling last week to its lowest level since January 2020. Markets have been buoyed by a growing assumption that further interest-rate hikes from the Federal Reserve and European Central Bank are unlikely.

In earnings due this week, Crowdstrike Holdings Inc. will underscore how businesses are prioritizing cybersecurity after recent high-profile corporate hacks, while Salesforce Inc. and Dell Technologies Inc. are expected to post slower sales growth as overall corporate expenditure tightens.

Gold’s Gains

Gold closed above $2,000 an ounce on Friday, capping a second weekly gain and bolstering confidence that higher prices are justified. The metal has been lifted in the second half of November by weaker US economic data that added to expectations for early rate cuts by the Fed next year.

Oil fell for a fourth day as traders looked ahead to this week’s delayed OPEC+ meeting.

Key events this week:

European Central Bank President Christine Lagarde appears in parliamentary committee, Monday
Australia retail sales, Tuesday
NATO foreign ministers meet, Tuesday
US Conf. Board consumer confidence, Tuesday
Fed Governor Chris Waller, Chicago Fed President Austan Goolsbee speak at different events, Tuesday
Australia CPI, Wednesday
Reserve Bank of New Zealand policy decision, Wednesday
Eurozone economic confidence, consumer confidence, Wednesday
Bank of England Governor Andrew Bailey speaks, Wednesday
US wholesale inventories, GDP, Wednesday
Fed releases its Beige Book of regional economic activity, Wednesday
Cleveland Fed President Loretta Mester speaks, Wednesday
China non-manufacturing and manufacturing PMIs, Thursday
Eurozone CPI, Thursday
US PCE deflator, Thursday
OPEC+ meeting, focused on finalizing output levels for 2024, Thursday
China Caixin manufacturing PMI, Friday
Eurozone manufacturing PMI, Friday
UK S&P Global/CIPS Manufacturing PMI, Friday
US construction spending, ISM Manufacturing, light vehicle sales, Friday
Fed Chair Jerome Powell, Chicago Fed President Austan Goolsbee speak at separate events, Friday