Dow Jones tanks 614 points as doubts swirl over China's Evergrande
Dow Jones fell nearly 972 points at worst levels of the day
Torsten Slok on market uncertainties due to rising inflation
Torsten Slok, chief economist at Apollo Global Management, discusses rising inflation concerns on 'Barron's Roundtable'
U.S. stock markets tumbled Monday as concerns over China’s property bubble roiled global markets ahead of the Federal Reserve’s upcoming policy meeting and a debt ceiling debate in Congress.
The Dow Jones Industrial Average fell 614 points, or 1.78%, while the S&P 500 index and the Nasdaq Composite index declined 1.7% and 2.19%, respectively. The Dow was down almost 972 points at its worst levels of the day.
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Monday's selling pushed the Dow 4.64% below its all-time high set on August 16. The S&P and the Nasdaq are now 3.95% and 4.3% off their respective record peaks.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| I:DJI | DOW JONES AVERAGES | 43786.63 | +378.16 | +0.87% |
| SP500 | S&P 500 | 5929.24 | +12.13 | +0.20% |
| I:COMP | NASDAQ COMPOSITE INDEX | 18879.7639 | -86.38 | -0.46% |
U.S. equity markets were pressured from the get go Monday as Chinese real estate developer Evergrande's shares tumbled more than 15% Monday amid worries the company will not be able to make a debt payment later this week. Some market watchers have called Evergrande China’s "Lehman Brothers moment," drawing comparisons to the collapse of the U.S. investment bank, which began the 2008 financial crisis.
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Hong Kong’s Hang Seng index tanked 3.3% while China’s Shanghai Composite was closed for holiday. The selling spilled over into Europe, where Germany’s DAX 30 fell 2.31%, France’s CAC 40 lost 1.74% and Britain’s FTSE 100 dropped 0.86%.
Closer to home, investors looked ahead to the Federal Reserve’s two-day policy meeting, where the central bank could announce when the tapering of its $120 billion per month of asset purchases will begin.
Also weighing on sentiment was the looming debt ceiling fight in Congress as Democrats will need to fund the government before September 30.
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In stocks, economically sensitive companies, including Caterpillar Inc. and Boeing Co., dragged the Dow lower amid growth doubts.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| CAT | CATERPILLAR INC. | 388.49 | +7.05 | +1.85% |
| BA | THE BOEING CO. | 143.87 | -2.21 | -1.51% |
Those worries caused a flight into Treasurys, pushing the yield on the 10-year note down 6 basis points to 1.30% and flattening the yield curve. Bank stocks declined with JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. all lower.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| JPM | JPMORGAN CHASE & CO. | 243.78 | +2.98 | +1.24% |
| BAC | BANK OF AMERICA CORP. | 46.84 | +0.78 | +1.68% |
| C | CITIGROUP INC. | 69.16 | +0.88 | +1.28% |
Homebuilder D.R. Horton Inc. lowered its outlooks for deliveries and revenue in the current quarter and fiscal year amid "significant disruptions in the supply chain." Rivals Lennar Corp. and PulteGroup Inc. declined in sympathy as investors also weighed a slight uptick in builder confidence.
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| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| DHI | D.R. HORTON INC. | 163.73 | +0.60 | +0.37% |
| LEN | LENNAR CORP. | 169.43 | +1.15 | +0.68% |
| PHM | PULTEGROUP INC. | 129.74 | +1.72 | +1.34% |
Meanwhile, Pfizer Inc. and BioNTech SE said their COVID-19 vaccine is safe and effective in 5- to 11-year-olds. The companies plan to seek authorization in the U.S., Europe and elsewhere as soon as possible.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| PFE | PFIZER INC. | 24.91 | -0.04 | -0.16% |
| BNTX | BIONTECH SE | 103.82 | +1.68 | +1.64% |
Energy stocks, including Chevron Corp. and Haliburton Co., were weaker as West Texas Intermediate crude oil slid $1.34 to $70.61 a barrel.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| CVX | CHEVRON CORP. | 162.17 | +0.87 | +0.54% |
| HAL | HALLIBURTON CO. | 31.82 | +0.61 | +1.97% |
Barrick Gold Crop. outperformed as gold ticked up $12.40 to $1,761.80 an ounce.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| GOLD | BARRICK GOLD CORP. | 17.91 | +0.01 | +0.06% |
Elsewhere, Lucid Group Inc. shares climbed for a fourth day after the Environmental Protection Agency on Thursday said the company's electric car has a 520-mile range, the longest ever awarded by the regulatory body.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| LCID | LUCID GROUP INC. | 2.05 | +0.02 | +0.78% |