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(Correction to say Treasury prices increased in paragraph 5)
* All eyes on the Fed policy meeting later this week
NEW YORK, Sept. 20 (Reuters) – Wall Street plunged on Monday as fear of contagion from a potential collapse of China’s Evergrande caused a large sell-off and prompted investors to flee stocks for safety concerns.
The Nasdaq fell to its lowest level in about a month, and Microsoft Corp, Alphabet Inc, Amazon.com Inc, Apple Inc, Facebook Inc and Tesla Inc were among the biggest brakes on the index as well as the S&P 500.
The top 11 sectors of the S&P 500 were down, with economically sensitive groups like energy falling the most.
Investors were also nervous ahead of the Federal Reserve’s policy meeting this week.
The banking sub-index fell sharply as US Treasury prices rose, with concerns about a possible Evergrande default appearing to affect the entire market.
“You kind of knew that when there was something that caught the markets off guard, it was probably going to lead to a bigger sell-off and you didn’t know what the reason would be,” said Sameer Samana, senior strategist of world markets. at the Wells Fargo Investment Institute.
“I guess this is the news from China but … it’s not all that surprising given how optimistic people were.”
Wednesday will bring the results of the Fed’s policy meeting, where the central bank is expected to lay the groundwork for tapering, although the consensus is that an actual announcement will be delayed until the November or December meetings.
Unofficially, the Dow Jones Industrial Average lost 620.22 points, or 1.79%, to 33,964.66, the S&P 500 lost 75.28 points, or 1.70%, to 4,357.71 and the Nasdaq Composite lost 325.95 points, or 2.17%, to 14,718.02.
The S&P 500 is down sharply from its September 2 intra-day high and is on course to end a seven-month winning streak.
Morgan Stanley strategists said they expected a 10% correction in the S&P 500 as the Fed begins to ease monetary support, adding that signs of slowing economic growth could deepen it to 20% .
The CBOE volatility index, known as the Wall Street fear gauge, rose. (Reporting by Caroline Valetkevitch in New York; additional reporting by Devik Jain and Sagarika Jaisinghani in Bengaluru and Noel Randewich in San Francisco; editing by Sriraj Kalluvila and Lisa Shumaker)
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