Stocks were trading at session low on Monday afternoon as concerns over the Chinese housing bubble disrupted global markets ahead of the Federal Reserve’s next policy meeting.
The Dow Jones Industrial Average lost 701 points, or 2.04%, while the S&P 500 Index and the Nasdaq Composite Index fell 2.12% and 2.67% respectively. The Dow Jones had earlier in the session reduced its loss to just 125 points.
|Me: DJI||MEDIUM DOW JONES||33770.04||-814.84||-2.36%|
|I: COMP||NASDAQ COMPOSITE INDEX||14615.756959||-428.21||-2.85%|
Shares of Chinese real estate developer Evergrande fell more than 15% on Monday, fearing the company might not be able to repay debt later this week.
INVESTORS EXCHANGE MONEY FOR STOCKS IN A QUICK FRENZY BEFORE THE FED MEETING
Some market watchers have called Evergrande China a “Lehman Brothers moment”, drawing comparisons to the collapse of the US investment bank, which sparked the 2008 financial crisis.
Hong Kong’s Hang Seng Index fell 3.3% as China’s Shanghai Composite was closed for the holidays. The sell-off spread to Europe, where the German DAX 30 fell 2.31%, the French CAC 40 lost 1.74% and the UK FTSE 100 fell 0.86%.
Closer to home, investors are eagerly awaiting the Federal Reserve’s two-day policy meeting, at which the central bank may announce the start of cutting its $ 120 billion per month asset purchases.
In equities, economically sensitive companies, including Caterpillar Inc. and Boeing Co., pushed the Dow Jones down amid doubts about growth.
|BA||THE BOEING CO.||207.95||-5.29||-2.48%|
These worries caused a flight to Treasuries, lowering the yield on the 10-year note by 3 basis points to 1.33% and flattening the yield curve. Bank stocks fell, JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. having all declined.
|JPM||JPMORGAN CHASE & CO.||151.76||-6.00||-3.80%|
|BAC||BANK OF AMERICA CORP.||38.70||-1.82||-4.50%|
Home builder DR Horton Inc. has lowered its outlook for deliveries and revenues for the quarter and current year due to “significant supply chain disruptions.” Competitors Lennar Corp. and PulteGroup Inc. lost their sympathy as investors also weighed on a slight uptick in builders’ confidence.
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|DHI||DR HORTON, INC.||87.21||-3.46||-3.82%|
Meanwhile, Pfizer Inc. and BioNTech SE have said their COVID-19 vaccine is safe and effective in children 5 to 11 years old. The companies plan to seek clearance in the United States, Europe and elsewhere as soon as possible.
Energy stocks, including Chevron Corp. and Haliburton Co., were weaker as West Texas Intermediate crude slid from $ 1.45 to $ 70.52 per barrel.
|CVX.HAL||n / A||n / A||n / A||n / A|
Elsewhere, Barrick Gold Crop. and Newmont Corp. outperformed as gold climbed $ 9 to $ 1,760.40 an ounce.
|GOLD||BARRICK GOLD CORP.||18,465||+0.14||+ 0.74%|