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Wall Street fell on Monday as all three major stock indexes ended in negative territory. The possible bankruptcy of a major Chinese real estate developer, the uncertainty of a possible change in the Fed’s existing monetary policies, and a contention in Washington over the debt ceiling have caused US stock markets to fall sharply.
How did the benchmarks perform?
The Dow Jones Industrial Average (DJI) fell 1.8% or 614.41 points to close at 33,970.47, marking its worst daily decline since July 19. Notably, only 1 component of the 30 stocks index finished in the green while 29 in the red. At its low for the session, the blue chip index was down more than 970 points.
The tech-rich Nasdaq Composite finished at 14,713.90, slipping 2.2% or 330.06 points on the weak performance of large-cap tech stocks. This is the worst daily performance of the technology-laden index since May 12.
Meanwhile, the S&P 500 was down 1.7% to end at 4,357.73, reflecting its largest single-day decline since May 12. Energy Select Sector SPDR (XLE), Financials Select Sector SPDR (XLF), Consumer Discretionary Select Sector SPDR (XLY) and Communications Services Select Sector SPDR (XLC) respectively fell by 3.1%, 2.3% %, 2.3% and 2%. All eleven sectors of the benchmark closed in negative territory.
The CBOE volatility index (VIX) jumped 23.6% to 25.71. At its highest session level, the fear gauge climbed to 28.79, its highest since May. A total of 12.24 billion shares were traded on Monday, above the last 20 sessions average of 9.89 billion. The declines outnumbered advances on the NYSE by a 5.40-to-1 ratio. On the Nasdaq, a 4.66-to-1 ratio favored lower issues.
Falling Global Stock Markets
Global stock markets, including US stock markets, fell sharply yesterday following news of the possible bankruptcy of a major Chinese real estate developer, the China Evergrande Group. The company faced a debt payment on its offshore bonds last week and said it was suffering from unprecedented hardship. He has over $ 300 billion in offshore bonds.
Fearing a recession in the Chinese property development market, metals values, particularly steel stocks, have taken a hard hit. The actions of steel majors like Nucor Corp. NUE and ArcelorMittal MT plunged 7.6% and 7.8% respectively. Nucor sports a rank 1 of Zacks (strong buy). You can see The full list of today’s Zacks # 1 Rank stocks here.
Crude oil prices also fell on fears of a Chinese economic slowdown that would weaken the global economic recovery. The global benchmark – the price of Brent crude fell more than 1% while the US benchmark – WTI crude fell almost 2%. As a result, the actions of APA Corp. APA and Devon Energy Corp. DVNs fell 6.1% and 5.4%, respectively.
Fearing a global slowdown, market participants moved funds from risky assets like stocks to safe-haven government bonds. As a result, bond prices rose and the yield on the benchmark 10-year US Treasury index fell 6.1 basis points to around 1.308%. Falling market interest rates caused financial giants like The Goldman Sachs Group Inc. GS and JPMorgan Chase & Co. JPM to fall 3.4% and 3%, respectively.
Focus on the Fed’s FOMC meeting and the public debt ceiling
The Federal Reserve will hold its next FOMC meeting on September 21-22. After the event closes, Fed Chairman Jerome Powell will make a statement regarding the outcome of the meeting. Investors are eagerly awaiting the central bank’s decision on any sort of cut to its current $ 120 billion monthly bond purchase program.
Investors are also worried as the deadline for raising the public debt ceiling approaches. Lawmakers must erase the bill to avoid any kind of government shutdown. Additionally, lawmakers’ dissatisfaction with the Biden administration’s proposed $ 3.5 billion spending plan and the new tax rule is another concern.
Economic data
The National Association of Home Builders reported that its monthly Confidence Index rose one point to 76 in September, ending a three-month losing streak.
The stocks that made the headlines
ConocoPhillips’ $ 9.5 billion deal to boost Permian presence
ConocoPhillips COP has announced an agreement to purchase all of the assets of Royal Dutch Shell plc (RDS.A) in the Permian, the most prolific basin in the United States. (Read more)
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The Goldman Sachs Group, Inc. (GS): Free Stock Analysis Report
JPMorgan Chase & Co. (JPM): Free Stock Analysis Report
Devon Energy Corporation (DVN): Free Stock Analysis Report
ConocoPhillips (COP): Free Stock Analysis Report
Royal Dutch Shell PLC (RDS.A): Free Stock Analysis Report
APA Corporation (APA): Free Stock Analysis Report
ArcelorMittal (MT): Free Stock Analysis Report
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