The stock market fell on Monday as political tensions in the US dampened investor sentiment. Several risks remain in October, which can be a historically rough month for stocks.
In the morning trade is that
Dow Jones industry average
fell 203 points, or 0.6%, after the index rose 482 points on Friday to close at 34,326. the
decreased by 1% and 1.7% respectively.
A familiar series of issues weighed on investor sentiment on Monday. Analysts noted that the December deadline for the US debt ceiling and the ongoing political conflict over the $ 1 trillion infrastructure bill and $ 3.5 trillion reconciliation package clouded the water.
“With the political tussle and drama surrounding the debt ceiling, troubled waters are likely to continue in early October,” wrote Keith Lerner, Truist’s co-chief investment officer.
Technology stocks were particularly hard hit as bond yields rose. Rising yields often mean that investors will see inflation and strong economic demand going forward. The yield on 10-year government bonds rose from 1.48% to 1.5%.
In fact, the risks still haven’t gone away. Supply chain constraints prevent some companies from meeting their sales goals, while the associated higher costs reduce profit margins. Higher corporate taxes could be on the way. In addition, bond yields are expected to continue to rise, making future earnings less valuable.
October can be a tough month for the S&P 500, especially after a tough September. If the index falls in September, the S&P 500 historically rose only 54% in October, according to data from Bank of America, with an average decline of 0.4%. October is also one of the more volatile months, the bank said.
Meanwhile, the S&P 500 is down just over 4% from its all-time high on September 2nd. Technically, a correction is a 10% decrease. “I think we haven’t bottomed out in stocks,” wrote Jay Pestrichelli, CEO of ZEGA Financial. “The stock market declines in September were uncomfortable, but far from a traditional market correction of 10%.”
Plus: Democrats are still negotiating a $ 3.5 trillion reconciliation bill
Overseas, Hong Kong
fell 2.2% as mainland China markets closed for a holiday. The pan-European
was up 0.2%.
Hong Kong was shaken when shares of a highly indebted real estate developer
China Evergrande (Ticker: 3333.HK) were suspended “pending the publication of a notice by the company containing inside information about an important transaction”. Reports swirled in the Chinese state media that a rival,
Hopson development, would buy a large Evergrande unit. Trading in Hopson (0754.HK) shares has also ceased.
Also read: The stock market has left worries about China Evergrande behind. Why this is a mistake.
Oil prices were barely moved in the run-up to an OPEC + decision, with US crude oil futures hovering around $ 75.80 a barrel.
Here are nine stocks in motion on Monday:
Modern (MRNA) and
Novavax (NVAX) saw their shares fall 4.8% and 4.1%, respectively, after it became known
Johnson & Johnson (JNJ) applies for approval from the Food and Drug Administration for its Covid-19 booster vaccination. Likewise,
Merck (MRK) said on Friday that his oral Covid-19 treatment is effective in reducing the risk of hospitalization. The Merck share gained 3.1%.
Sage therapeutics (SAGE) and
Biogenic (BIIB) rose 0.9% and fell 0.5% after companies announced the effectiveness of a new treatment for depression.
Tesla (TSLA) rose 3.7% after the electric vehicle company reported a record quarter on Saturday with 70% more deliveries from a year earlier.
Akamai Technologies (AKAM) shares fell 1.9% after being downgraded from overweight to sector weight by KeyBanc Capital Markets.
DuPont de Nemours (DD) stock rose 3.4% after being upgraded from neutral to overweight in JPMorgan.
Adidas lost 1.9% (ADS.Germany) after the shares of the sportswear giant were downgraded to underperform by Bank of America.
Write to Jacob Sonenshine at firstname.lastname@example.org