US Stocks Fall on China Fears 09/20 09:53
Stocks slumped in morning trading on Wall Street Monday in a broad sell-off
that extends an already weak streak for major indexes. Worries about
debt-engorged Chinese property developers --- and the damage they could do to
investors worldwide if they default --- are rippling across markets.
(AP) -- Stocks slumped in morning trading on Wall Street Monday in a broad
sell-off that extends an already weak streak for major indexes.
Worries about debt-engorged Chinese property developers --- and the damage
they could do to investors worldwide if they default --- are rippling across
The S&P 500 fell 1.5% as of 10:03 a.m. Eastern. The benchmark index hasn't
had a decline of more than 1% since mid-August. It's also coming off two weeks
of losses and is on track for its first monthly decline since January.
The Dow Jones Industrial Average fell 495 points, or 1.4%, to 34,086 and the
Nasdaq fell 1.7%.
Technology companies led the broader market lower. Apple fell 1% and
chipmaker Nvidia shed 2.7%.
Banks posted big losses as bond yields slipped. That hurts their ability to
charge more lucrative interest rates on loans. The yield on the 10-year
Treasury fell to 1.32% from 1.37% late Friday. Bank of America fell 3.1%.
Oil prices fell 1.3% and weighed down energy stocks.
Utilities and other sectors that are considered less risky held up better
than the rest of the market.
The worries over Chinese property developers and debt recently centered on
Evergrande, one of China's biggest real estate developers, which looks like it
may be unable to repay its debts.
Many analysts say they expect China's government to prevent a blowup serious
enough to cause losses to cascade through markets. But any hint of uncertainty
may be enough to upset Wall Street, after the S&P 500 has glided higher in
almost uninterrupted fashion since October.
"While the Evergrande situation is front and center, the reality is, stock
market valuations are overstretched and the market has enjoyed too long of a
break from volatility and Monday's stock market declines are not surprising,"
David Bahnsen, chief investment officer of wealth-management firm The Bahnsen
Group said in a research note.
The Hang Seng, Hong Kong's main index, dropped 3.3% for its biggest loss
since July. Many other markets in Asia were closed for holidays. European
markets fell about 2%.
Investors are also watching to see how the Federal Reserve reacts to bumps
in the broader economic recovery. The central bank has signaled that it will
eventually reduce its bond purchases, which have helped keep interest rates
low. The timing of that move remains unknown.
The Fed is due to deliver its latest economic and interest rate policy
update on Wednesday.
Other concerns for investors include a potentially messy political fight in
Washington over the U.S. debt ceiling. House Democrats said Friday they planned
to move this week to suspend the cap on the government's borrowing authority,
and the White House ratcheted up pressure on Republicans by warning state and
local governments that severe cuts lie ahead if the measure fails in the Senate.