Markets end mixed after Chinese economic data

North American markets ended mixed on Monday, with energy stocks rallying but Shopify and other growth stocks losing ground after downbeat Chinese economic data added to worries about a global slowdown and rising interest rates.

China’s economic activity cooled sharply in April as widening COVID-19 lockdowns took a heavy toll on consumption, industrial production and employment, adding to fears the economy could shrink in the second quarter.

However, energy stocks got a lift from optimism that China would see significant demand recovery after positive signs that the coronavirus pandemic was receding in the hardesthit areas.

The S&P 500 energy index rallied to a 2014 intraday high, and it closed up 2.6 per cent, making it the strongest performer among 11 sector indexes. TSX energy stocks gained by a similar percentage, and helped the TSX – which has a heavy weighting in oil and gas names – outperform Wall Street. U.S. crude futures settled up $3.71 at US$114.20 a barrel.

Investors questioned whether a strong day on Friday might signal the end of a recent sell-off that has left the S&P 500 down about 16 per cent from its record-high close in January.

Twitter fell more than 8 per cent after Bloomberg reported that Elon Musk said a deal to buy the social-media company at a lower price than his previously agreed US$44-billion was “not out of the question.”

Tesla, which Mr. Musk leads, fell almost 6 per cent. On the TSX, Shopify was down nearly 11 per cent.

Investors have been worried that aggressive interest-rate hikes by the U.S. Federal Reserve to combat decades-high inflation could tip the economy into a recession, with the conflict in Ukraine, supply chain snarls and the pandemic-related lockdowns in China exacerbating the economic troubles.

Data on Monday showed factory activity in New York State slumped in May for the third time this year amid a collapse in new orders and shipments.

The S&P 500 declined 0.39 per cent to end the session at 4,008.01 points. Goldman Sachs raised its 2022 earnings per share growth forecast to 8 per cent, from more than 5 per cent, but cut its year-end target for the S&P 500 to 4,300 from 4,700 on interest-rate and growth fears.

The S&P/TSX Composite Index was up 106.60 points, or 0.53 per cent, at 20,206.41.

Investors are focused on U.S. retail sales data due on Tuesday, after worrying inflation and consumer sentiment data last week.

Treasury yields fell, with the benchmark U.S. 10-year note down 4.7 basis points at 2.886 per cent, which some see as a sign the market has priced in all the Fed’s rate hikes.

“The most important thing happening in the market right now is the fact that the 10-year yield has held below 3 per cent,” said Tom Hayes, chairman and managing member of Great Hill Capital LLC.