Boston, Massachusetts 2021-09-20 18:30:00 –
Wall Street shares plunged Monday, reflecting overseas losses, and the S & P 500 index fell the most in four months.
Concerns over China’s debt-ridden real estate developers, and the damage they could inflict on investors around the world in the event of default, have spread throughout the market. Investors are also concerned that the Federal Reserve Board may indicate that it plans to withdraw some of the support it has given to markets and the economy this week.
The S & P 500 fell 75.26 points (1.7%) to 4,357.73, the largest decline since May. At some point, the benchmark index fell 2.9%, the largest drop since October last year. The S & P 500 is on track to break out of its two-week loss and head for its first monthly decline since January. The S & P 500 spent an unusually long time without pulling back more than 5%.
The Dow Jones Industrial Average fell 614.41 points (1.8%) to 33,970.47. The Good Equity Index temporarily fell 971 points. The Nasdaq fell 330.06 points (2.2%) to 14,713.90. Hong Kong’s main index, the Hang Seng Index, fell 3.3%, the largest loss since July. The European market fell about 2%.
“What happened here is that the list of risks is finally too big to ignore,” said Michael Alone, chief investment strategist. State Street Global Advisor.. “There are many uncertainties during seasonally difficult times for the market.”
Concerns about China’s real estate developers and debt have recently been concentrated on one of China’s largest real estate developers, Evergrande, who may not be able to repay their debt.
Just as the collapse of Lehman Brothers ignited the 2008 financial crisis and the Great Recession, a potential collapse there could cause a chain reaction in China’s real estate development industry and spread to the wider financial system. There is a concern that it may be possible. These real estate companies are a major driver of China’s economy, which is the second largest in the world.
If the debt cannot be repaid, the investors holding the bond will suffer significant losses, raising concerns about their financial strength. These bondholders may also be forced to sell other irrelevant investments to raise cash, which can hurt seemingly irrelevant market prices. This is a product of how closely the world markets are tied together, a concept that the financial community calls “contagion.”
Many analysts hope that the Chinese government will prevent such a scenario, which does not look like a Lehman-style moment. Nevertheless, after the S & P 500 has risen almost uninterrupted since October, signs of uncertainty may be enough to confuse Wall Street.
In addition to the Evergrande Group, some other concerns lie beneath the almost calm surface of the stock market. In addition to the Federal Reserve Board of Governors may announce that it will release an accelerator in support of the economy, Congress is a devastating game of chicken before allowing the US Treasury to borrow more money. You might choose, and the COVID-19 pandemic continues to squeeze the world economy.
Regardless of what was the biggest cause of the market plunge on Monday, some analysts said it was due to such a fall. The S & P 500 hasn’t fallen 5% since its peak since October, and its nearly unstoppable rise makes stocks look more expensive and less error-prone.
All concerns have pushed some on Wall Street to predict future declines in stocks. Morgan Stanley strategist said Monday that it could cause a drop of more than 20% in the S & P 500. They weaken shopper confidence, point out that tax increases and inflation can dig into corporate profits, and the economy can slow down sharply.
Even if the economy could avoid a worse-than-expected slowdown, Morgan Stanley’s Michael Wilson said stocks could fall by about 10% as the Fed refrains from supporting the market. .. The Federal Reserve Board will provide the latest economic and interest rate policy updates on Wednesday.
Earlier this month, Stiffel strategist Barry Banister said he expects the S & P 500 to fall 10% to 15% in the last three months of the year. He cited the declining Fed’s support, among other factors. Bank of America strategist Savita Subramanian has also set a goal of 4,250 for the S & P 500 by the end of the year. That’s a 4.1% drop from Friday’s closing price.
Technology companies have made the wider market fall. Apple was down 2.1% and chip maker Nvidia was down 3.6%.
Banks posted large losses due to lower bond yields. It undermines their ability to impose more favorable interest rates on loans. Yields on 10-year Treasuries fell from 1.37% late Friday to 1.31%. Bank of America fell 3.4%.
Oil prices fell 2.3%, putting pressure on energy stocks. ExxonMobil fell 2.7%.
Small business stocks were one of the biggest losers. Russell 2000 fell 54.67 points (2.4%) to 2,182.20.
The airline was one of the few glorious spots. American Airlines rose 3%, leading all S & P 500 winners. Delta Air Lines was up 1.7% and United Airlines was up 1.6%.
Cryptocurrency traders also had a tough day. Bitcoin prices have fallen nearly 8% to $ 43,717, according to Coindesk.
Investors have the opportunity to take a closer look at how the slowdown affected different companies when their next corporate profits began in October. Strong earnings were the main driver of equities, but supply chain disruptions, rising costs, and other factors can make it even more difficult for companies to meet high expectations.
“The biggest strength of the market this year can be the biggest risk,” Arone said.
Stocks drop the most since May on worries over China Source link Stocks drop the most since May on worries over China