By Amruta Khandekar
(Reuters) -Wall Street's main indexes fell on Monday as downbeat China data added to worries about a global economic slowdown against the backdrop of aggressive policy tightening by the U.S. Federal Reserve.
Chinese and European stock markets fell after data showed China's economic activity cooled sharply in April as COVID-19 lockdowns took a heavy toll on consumption, industrial production and employment.
Seven of the 11 major S&P sectors declined. Technology and consumer discretionary stocks fell 0.8% and 1.7%, respectively.
Big growth companies such as Amazon.com (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL) Inc, Microsoft Corp (NASDAQ:MSFT), Apple Inc (NASDAQ:AAPL), Tesla (NASDAQ:TSLA) Inc and Nvidia Corp slipped between 0.6% and 3.9%.
Energy shares outperformed and were up 2.3%, followed by gains in defensive sectors such as consumer staples, utilities and healthcare.
The healthcare sector got a boost from a 3.7% jump in the shares of Eli Lilly (NYSE:LLY) & Co after the drugmaker won U.S. approval for tirzepatide, to treat adults with type 2 diabetes.
Wall Street closed sharply higher on Friday, but still the S&P 500 and the Nasdaq indexes posted their longest weekly losing streaks in over a decade.
"(China data) was kind of the morning overhang on the market, but it's trying to find its footing led by energy. You're seeing people rotate into the winners of the year so far, which are energy and utilities," said Jay Hatfield, chief executive officer at Infrastructure Capital Management in New York.
"We think that a lot of sectors in the market are undervalued."
Investors have been worried that aggressive interest rate hikes by the Fed to combat decades-high inflation could tip the U.S. economy into recession, with the conflict in Ukraine, supply chain snarls and the pandemic-related lockdowns in China exacerbating the situation.
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 and the tech-heavy Nasdaq have fallen 15.8% and 25%, respectively, so far this year, with growth stocks taking a hit on concerns that bigger rate hikes could hurt their future cash flows.
Traders are now pricing a near 86% chance of a 50-basis-point hike by the Fed in June.
At 11:45 a.m. ET, the Dow Jones Industrial Average was down 9.59 points, or 0.03%, at 32,187.07, the S&P 500 was down 11.80 points, or 0.29%, at 4,012.09, and the Nasdaq Composite was down 100.64 points, or 0.85%, at 11,704.36.
Focus is now on the retail sales report due on Tuesday, after worrying inflation and consumer sentiment data last week.
Retailers such as Walmart (NYSE:WMT) Inc, Home Depot (NYSE:HD) and Target Corp (NYSE:TGT) are due to report their quarterly results this week.
Spirit Airlines jumped 11% after JetBlue Airways launched a hostile takeover bid for the discount carrier. JetBlue shares slipped 4.5%, while shares of rival bidder Frontier Group gained 6.2%.
Declining issues outnumbered advancers for a 1.03-to-1 ratio on the NYSE and a 1.07-to-1 ratio on the Nasdaq.
The S&P index recorded one new 52-week high and 31 new lows, while the Nasdaq recorded 13 new highs and 108 new lows.