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U.S. stocks fall on fears of contagion from China real estate troubles – Honolulu, Hawaii

Honolulu, Hawaii 2021-09-20 13:15:00 –

Stocks fell on Wall Street today, with widespread sales expanding the already weak streak of key indices.

Concerns about debt-stricken Chinese real estate developers, and the damage they can do to investors around the world if they default, are spilling over to the entire market.

The S & P 500 fell 1.8% on Wall Street at noon. The benchmark index has not fallen by more than 1% since mid-August. We have also suffered a two-week loss and are on track for the first monthly decline since January.

The Dow Jones Industrial Average fell 572 points (1.7%) to 34,012, while the Nasdaq fell 2.3%. Small business stocks were one of the biggest losers. Russell 2000 fell 2.7%.

Technology companies have made the wider market fall. Apple was down 2.3% and chip maker Nvidia was down 3.7%.

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 1.32%. Bank of America fell 3.1%.

Oil prices fell 1.5%, putting pressure on energy stocks.

Utilities and other sectors that are considered low risk are holding up better than other markets.

There were few bright spots in the wider market. Pfizer increased by 0.9% after stating that the vaccine is effective for children aged 5 to 11 years and will soon seek US approval for that age group.

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.

Many analysts say they hope the Chinese government will prevent a serious explosion that would cost the entire market. But after the S & P 500 has risen almost uninterrupted since October, signs of uncertainty may be enough to confuse Wall Street.

Hong Kong’s main index, the Hang Seng Index, fell 3.3%, the largest loss since July. Many other Asian markets have been closed due to holidays. The European market fell about 2%.

Michael Alone, Chief Investment Strategy Officer at State Street Global Advisors, said: “There are many uncertainties during seasonally difficult times for the market.”

In addition to the Evergrande Group, some other concerns lie beneath the almost calm surface of the stock market. The Federal Reserve Board may soon announce that it will stop accelerating financial support, Congress may opt for a destructive game of chicken before allowing the U.S. Treasury to borrow more money. No, and the COVID-19 pandemic continues to weigh on the global 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.

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.



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