Technology companies led a broad slide for stocks on Wall Street, as rising bond yields and energy prices stoked investors’ concerns about higher inflation, reports ABC News.
The S&P 500 fell 1.3%, the Dow Jones Industrial Average dropped 0.9% and the tech-heavy Nasdaq lost 2.1%.
The price of oil hit a seven-year high as OPEC and allied oil producers stuck with a plan to cautiously raise production even as global demand for crude oil increases.
Treasury yields, which moved sharply higher last week, rose again.
A Worldwide Outage
The social network and its Instagram and WhatsApp platforms also suffered a worldwide outage that began around mid-morning on Monday.
“What you’re seeing today is those areas — the expensive, growth technology type of areas — that had led over the past few months as interest rates remained low are now reversing as you’re seeing interest rates move higher,” said Megan Horneman, director of the portfolio strategy at Verdence Capital Advisors.
The S&P 500 fell 56.58 points to 4,300.46.
Energy companies rose along with energy prices.
- Marathon Oil climbed 4.1%.
- Treasury rose to 1.49% from 1.47% Friday.
The swift rise in interest rates has forced a reassessment of whether stocks have grown too expensive, particularly already high-priced technology companies.
Investors Uneasy
Investors are increasingly worried about inflation as oil prices rise and companies continue facing supply problems that increase their costs and force them to raise prices.
They are also still closely monitoring economic data for more signals about the pace of the recovery as businesses and consumers deal with the impact of COVID-19 and the highly contagious delta variant.
Economy’s Health
Wall Street will get more information on the economy’s health this week.
The employment market has been struggling to fully recover from the damage done by COVID-19 more than a year ago.
Tesla held on to a slight gain after the electric vehicle maker reported surprisingly good third-quarter deliveries.
The stock rose 0.8%.
In Asia, Hong Kong’s benchmark fell more than 2% after troubled property developer China Evergrande’s shares were suspended from trading.
Evergrande suspended
Shares in troubled real estate developer China Evergrande Group and its property management unit Evergrande Property Services were suspended from trading Monday in Hong Kong as investors awaited the next steps in the saga of its debt crisis.
Cailian reports
Cailian, a Chinese online news service affiliated with the state-run newspaper Securities Times, said another developer, Hopson Development Holdings, was planning to acquire a majority share in Evergrande Property Services Group.
Hopson suspended trading of its shares in Hong Kong on Monday.
Hopson’s public relations department said the company would not comment on “market rumors.”
Evergrande in Hong Kong exchange
Evergrande Property Services said in its announcement to the Hong Kong exchange that its shares were suspended from trading pending an announcement related to a merger or takeover.
Phone calls to Evergrande’s PR office in Hong Kong rang unanswered and the company’s offices elsewhere in China were closed for a holiday.
Evergrande has been struggling to avoid defaulting on billions of dollars of debt.
Beijing to reduce debts
Reports show it has a much lower debt-to-equity ratio than its largest rivals.
Jitters over a slowdown in China’s economy and potential turmoil in its vital property industry have rattled world markets in the past few weeks.
The fear is that a default by Evergrande could cascade throughout the Chinese economy and even world financial markets.
However, economists say that while Beijing can prevent a credit crunch in China it wants to avoid bailing out Evergrande at a time when it is trying to force companies to reduce debt levels.
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Source: ABC News
