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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 coronavirus pandemic was receding in the hardest-hit areas.

The S&P 500 energy index rallied to a 2014 intra-day high, and it closed up 2.6%, 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% from its record high close in January.

“After the big rally on Friday, people are looking around and asking whether it feels sustainable,” said Ross Mayfield, an investment strategist at Baird in Louisville, Kentucky. “Does it feel like the momentum thrust you would see coming off of a low, or is there still more of a capitulation to be worked out?”

Many of Wall Street’s megacap growth stocks were lower, with Amazon and Google-owner Alphabet losing more than 1% and weighing on the S&P 500 and Nasdaq.

Twitter fell more than 8% 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 Musk leads, fell almost 6%. On the TSX, Shopify was down nearly 11%.

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.

Traders are now pricing a near 86% chance of a 50-basis-point hike by the Fed in June.

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

The Nasdaq declined 1.20% to 11,662.79 points, while Dow Jones Industrial Average rose 0.08% to 32,223.42 points.

The S&P/TSX Composite index was up 106.60 points, or 0.53%, at 20,206.41.

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

Retailers including Walmart Inc, Home Depot and Target Corp are due to report their quarterly results this week.

Spirit Airlines rallied 13.5% after JetBlue Airways launched a hostile takeover bid for the discount carrier. JetBlue shares slipped 6.1%, while shares of rival bidder Frontier Group gained almost 6%.

Advancing issues outnumbered declining ones on the NYSE by a 1.08-to-1 ratio; on Nasdaq, a 1.35-to-1 ratio favored decliners. The S&P 500 posted one new 52-week high and 31 new lows; the Nasdaq Composite recorded 17 new highs and 190 new lows. Volume on U.S. exchanges was 11.3 billion shares, compared with a 13.2 billion average over the last 20 trading days.

Treasury yields fell, with the benchmark U.S. 10-year note down 4.7 basis points at 2.886%, 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%,” said Tom Hayes, chairman and managing member of Great Hill Capital LLC.

Five Fed officials slated to speak on Tuesday also is key considering the market’s recent tumble, he said.

“Usually when you’re near a low in the market and you got five Fed speakers, they’re generally not there to talk the market down,” Hayes said.

With earnings growth turning positive and a more reasonable price-to-earnings ratio, stocks are more attractive, he said.

Reuters, Globe staff

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