S&P 500 Down More Than 2% As Growth Concerns Rise
- All eyes are on the Fed policy meeting later this week
- Major airlines mingle as US relaxes travel rules
- Falling indices: Dow 2.6%, S&P 500 2.7%, Nasdaq 3.2%
September 20 (Reuters) – U.S. stocks fell on Monday, with the Nasdaq falling more than 3%, as concerns mounted over the pace of economic growth and a possible spillover of Evergrande’s problems in China.
Investors were also nervous ahead of the Federal Reserve’s policy meeting this week.
Microsoft Corp (MSFT.O), the owner of Google Alphabet Inc (GOOGL.O), Amazon.com Inc (AMZN.O), Apple Inc (AAPL.O), Facebook Inc (FB.O) and Tesla Inc (TSLA . O) were among the biggest brakes on the S&P 500.
But all of the S&P 500’s top 11 sectors were down, with economically sensitive groups like energy (.SPNY) falling the most.
The banking sub-index (.SPXBK) lost more than 4%, following US Treasury yields, as concerns over the Evergrande default (3333.HK) appeared to affect the broader market.
The S&P 500 is down about 4.8% from its September 2 intra-day high and is on track to end a seven-month winning streak.
“Today, the market is down due to the threat of Chinese real estate contagion, despite numerous headlines recently on COVID,” said Jake Dollarhide, CEO of Longbow Asset Management in Tulsa, Oklahoma.
“We are due for a correction,” he said. “It’s like the market is addicted to buying the downside. Every time it drops 5% or 6%, all that liquidity jumps to support us.”
Wednesday will bring the results of the Fed’s policy meeting, where the central bank is expected to lay the groundwork for tapering, although the consensus is that an actual announcement will be delayed until the November or December meetings. Read more
The Dow Jones Industrial Average (.DJI) lost 900.25 points, or 2.6%, to 33,684.63, the S&P 500 (.SPX) lost 117.85 points, or 2.66%, to 4 315.14 and the Nasdaq Composite (.IXIC) lost 477.75 points, or 3.18%, to 14,566.22.
As of Monday afternoon, just over half of S&P 500 stocks were down 10% or more from their 52-week highs, with 93 stocks down more than 20%, according to data from Refinitiv.
Morgan Stanley strategists said they expected a 10% correction in the S&P 500 as the Fed begins to ease monetary support, adding that signs of slowing economic growth could deepen it to 20% .
The CBOE Volatility Index (.VIX), known as the Wall Street fear gauge, hit its highest level in more than four months.
Most airlines edged down after the United States announced it would ease travel restrictions in November for passengers from China, India, Britain and many other European countries that have received COVID-19 vaccines. Read more
Falling issues outnumbered advancing ones on the NYSE by an 8.68 to 1 ratio; on the Nasdaq, a ratio of 6.04 to 1 favored the declines.
The S&P 500 posted no new 52-week highs and three new lows; the Nasdaq Composite recorded 20 new highs and 178 new lows.
Reporting by Caroline Valetkevitch in New York and Devik Jain and Sagarika Jaisinghani in Bengaluru; additional reporting by Noel Randewich in San Francisco; Editing by Sriraj Kalluvila and Lisa Shumaker
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