Live Stock Market News Updates: Wall St. Sinks Amid China’s Evergrande Contagion Fears, US Debt Politics
Shares plunged Monday, with major indices tumbling more than 1% at the opening bell, as investors nervously watched the potential ripple effects of the bankruptcy of a major Chinese real estate company, as well as ongoing discussions over the debt cap in Washington.
After defying gravity for much of the summer, September will be a tough month for markets, with key benchmarks pulling back for three weeks in a row. At Wall Street’s opening bell, the Dow fell more than 500 points, while the S&P 500 also fell nearly 70 points, adding to last week’s losses. The CBOE Volatility Index, or Vix (^VIX), rose more than 30% as a confluence of concerns in the markets.
Shares of China Evergrande Group (3333.HK) fell more than 10% on the Hong Kong Stock Exchange as fears mounted that China’s real estate juggernaut would collapse under heavy debt, impacting shareholders, bondholders and possibly unrest elsewhere in the world. the world markets. The specter of wider crackdown by the Chinese government against the real estate sector in Hong Kong added to the concerns.
“While the Evergrande situation is paramount, the reality is that stock market valuations are overburdened and the market has had too long a break from volatility and Monday’s stock market declines are not surprising,” said David Bahnsen. , chief investment officer at wealth. management company The Bahnsen Group, with more than $3 billion in assets under management.
Meanwhile, there were heated debates in Washington about raising the government’s borrowing limit based on the risk-out tone in the markets. US Treasury Secretary Janet Yellen called on Congress to raise the US debt ceiling again in a Wall Street Journal opinion piece, and suggested that otherwise it would risk the government defaulting on payments and causing a “widespread economic catastrophe”.
The American House is set to vote this week about the debt ceiling and an emergency measure to keep the government working at the end of the fiscal year at the end of September.
Even heading into Monday’s session, the three main US stock indices had fallen so far in September amid escalating concerns about the Delta variant, the pace of the economic recovery, inflation and the path forward for monetary and fiscal policy. . Retail sales data last week suggested that consumers were moving back to goods rather than services during the latest wave of coronavirus, and still weak consumer confidence data suggested many people were growing concerned about inflationary pressures.
And on monetary policy, the prospects of a near-term shift to the Fed’s current ultra-accommodative policy have also added uncertainty to markets. The Federal Open Market Committee will hold its two-day policy-making meeting on Tuesday and Wednesday, culminating in a new monetary policy statement, updated economic projections and a press conference from Federal Reserve Chairman Jerome Powell.
One of the main focuses at this week’s meeting will be whether the Federal Reserve is ramping up its alert around when to wind down its crisis-era asset purchase program. The central bank has suggested that this quantitative easing — which currently consists of $120 billion a month purchases of Treasury bills and mortgage-backed securities — would begin once the economy has made “significant further progress” toward the Fed’s targets. in terms of inflation and employment.
“While we readily admit that the committee could make changes to the September statement to signal winding down closer, we believe the soft hiring pressure in August and the recent surge in COVID cases have added enough uncertainty to the economic outlook that would prevent officials from making substantive changes in wording,” Sam Bullard, senior economist for Wells Fargo, wrote in a note Sunday.
“If economic data improves sufficiently in the coming weeks, Fed officials could use public comments in October to indicate that the winding-down will begin in November,” he added.
For investors, the Fed’s phasing out move will be closely watched as asset purchases were a key tool the central bank used to bolster liquidity and support the economic recovery during the pandemic, and in expansion contributed to the stock’s rise to record highs.
While stocks have lost some of their momentum so far in September, some strategists believe the move may be temporary.
“You have to look at where the crowds are, and right now there is so much negative sentiment regarding the market. That’s why we bought this dip this week and told our customers that we think the market setup is perfect for a pretty big rally for the rest of September and possibly early October,” Eddie Ghabour, managing partner of Key Advisors, told Yahoo Finance on Friday. “The next big hurdle we have to overcome is Wednesday’s Fed meeting. If the Fed doesn’t disappoint, I think it’s a risk-on rally… at the moment everyone is so pessimistic about the market, and to our view markets don’t crash when everyone is positioned for it.”
9:30 a.m. ET Monday: Stocks plunge at the opening bell
Here are the main moves in the markets as of 9:30 a.m. ET:
S&P500 (^ GSPC): 4,359.72, -73.27 (-1.65%)
dow (^DJI): 34,040.24, -544.64 (-1.57%)
Nasdaq (^IXIC): 14,748.46, -295.51 (-1.96%)
rough (CL=F): $70.84 per barrel, -$1.13 (-1.57%)
Gold (GC=F): $1,759.10 per ounce, +7.70 (+0.44%)
10-year treasury (^TNX): -5.0 fps to yield 1.319%
6:57 a.m. ET Monday: Stock Futures Plunge, Dow Drops 500+ Points
These were the main moves in the markets as of Monday morning:
S&P 500 futures (ES = F): -56.75 points (-1.28%) at 4,365.00
Dow futures (YM=F): -541 points (-1.57%) to 34,921.00
Nasdaq futures (NQ = F): -152.25 points (-0.99%) to 15.173.75
rough (CL=F): -$1.43 (-1.99%) to $70.54 per barrel
Gold (GC=F): +$8.20 (+0.47%) to $1,759.60 per ounce
10-year treasury (^TNX): -3.9 bp for 1.331% yield
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck