Stocks fall, swell in September’s losses.
A long list of concerns caught up with Wall Street in September, the stock market’s worst month since the early days of the pandemic.
After falling 1.2 percent on Thursday, the S&P 500 ended September down 4.8 percent, its sharpest monthly decline since March 2020 and one that broke a seven-month gain.
Until a recent fall, investors were shaken by the emergence of the delta version of the coronavirus, with a back-up supply chain and persistent inflation, with the S&P 500 rallying to a September 2 record and up 21 percent since the start. with. Year. But shares began to fall as concerns grew about a political impasse that led to US loan defaults and volatility in China’s real estate market rocked Wall Street.
With investors planning to begin slowing purchases of the Federal Reserve’s government-backed bonds, yields on the 10-year Treasury note hit its highest level in months, reaching 1.55 percent on Wednesday. The yield was 1.52 per cent till Thursday afternoon.
Large technology stocks, which have a major impact on major stock indexes and which typically fall as bonds become more attractive to investors, posted double-digit declines. Apple ended the month about 10 percent off its September 7 record. The tech-heavy Nasdaq Composite fell 5.31 percent in September, including a 0.4 percent drop on Thursday.
Throughout the month, Treasury Secretary Janet L. Yellen warned of economic devastation if Congress did not raise the US debt limit. The Treasury is expected to run out of cash in October, at which point things like Social Security payments and government paychecks will be delayed, and interest rates could rise.
There was further concern that the default by China Evergrande Group would stir up global markets. The company, which has about $300 billion in debt, faced multiple payment deadlines. Those concerns eased somewhat in recent days, as the company said it was selling its stake in Shengjing Bank for about $1.5 billion, with proceeds going toward paying down its debt.
But even with September’s decline, the S&P 500 remains up more than 27 percent from its pre-pandemic record. Analysts have said throughout the month that a correction — the Wall Street word of the art for a drop of more than 10 percent — would be short-lived at most.
Retail stocks were the worst performer on Thursday. Shares of Bed Bath & Beyond fell nearly 22 percent after the company lowered its sales forecast, saying a recent surge in Covid-19 cases had caused a sharp slowdown in traffic at its stores and cost And supply-chain problems were hitting the bottom of it. Line. Used vehicle retailer CarMax dropped nearly 13 percent, while the gap closed down 8 percent.
Retailers are anticipating delays and shortages of merchandise during the holiday shopping season, leading to higher labor costs and skyrocketing shipping fees. Consumer confidence is at its lowest level in seven months, the conference board reported on Tuesday.
Factories in Vietnam, the second largest supplier of apparel and footwear to the United States after China, have been forced to close or operate at severely reduced capacity as coronavirus cases rise. Power cuts and blackouts have also slowed or closed factories across China this week.
“Supply chain constraints have become a major impediment to inventory restocking,” wrote Oxford Economics chief economist Lydia Boussour in a note. “Assuming that the global virus situation gradually improves, we expect bottlenecks to ease in 2022 as production ramps up and shipping congestion begins to clear.”
Fed Chairman Jerome H. Powell also voiced this sentiment, as he noted in Senate testimony on Wednesday that factory shutdowns and shipping problems were driving inflation above the Fed’s average target of 2 percent.
Energy stocks were a bright spot for the S&P 500 in September following a rally in oil prices. West Texas Intermediate, the US benchmark crude, rose nearly 10 percent for the month.
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