August 15, 2022

After a Lift From Corporate Deals, Stocks Sag

Stocks rose at the start of trading after Wendy’s/Arby’s Group said it would sell control of its Arby’s business to a private equity firm. VF Corporation, whose brands include Wrangler and The North Face, also said it would buy boot maker Timberland for more than $2.2 billion.

The deals gave investors some much-needed confidence, and the Dow Jones industrial average quickly rose as much as 65 points. By midday, the enthusiasm had sagged, and the Dow closed up 1.06 points to 11,952.97. The Standard Poor’s 500-stock index rose 0.85 points at 1,271.83, and the Nasdaq lost 4.04 points at 2,639.69.

The deal-making on Wall Street came after weak economic news has sent stocks lower for six straight weeks. On Friday, the Dow fell below 12,000 for the first time since March.

Over the past month, the economic news, particularly out of the United States, has turned distinctly negative. Investors are now worried that the rise in share prices in the early part of the year may have been overdone.

Nouriel Roubini, the New York University economics professor known for predicting the 2008 financial crisis, cautioned against risky investments.

“In the last month, things have changed, the evidence is that maybe this is not just a soft patch but something worse,” he said in a speech in Singapore. “If your horizon is the next two or three months, I would be a bit defensive on equities. …This is time to be cautious, and safe rather than sorry.”

Tuesday may have more to offer, with the release of Chinese inflation data that is expected to stoke concerns that the central bank there will tighten monetary policy again soon. Retail sales figures in the United States for May will also provide an insight into the state of the economic recovery; consumer spending accounts for around 70 percent of the American economy.

In the oil markets, crude continued to fall on concerns over the global economic recovery and speculation that Saudi Arabia would decide to raise production levels despite last week’s surprise decision by the OPEC oil cartel to maintain current levels.

Benchmark oil for July delivery was down 79 cents at $98.50 a barrel at the New York Mercantile Exchange.

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