Stock Market Today: Tech Stocks Tumble as U.S. Political Pressures
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Investors were given another update in the China Evergrande saga Monday.
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The stock market was falling on Monday, as U.S. political friction damped investor sentiment. Several risks remain in October, which can be a historically rough month for stocks.
In morning trading, the
Dow Jones Industrial Average
was down 203 points, or 0.6%, after the index rose 482 points Friday to close at 34,326. The
S&P 500
and the
Nasdaq Composite
were down 1% and 1.7%, respectively.
A familiar set of themes weighed on investor sentiment Monday. Analysts noted that the U.S. debt ceiling deadline in December and continuing political conflict over the $1 trillion infrastructure bill and $3.5 trillion reconciliation package muddied the waters.
“Entering October, choppy waters are likely to continue given the ongoing political wrangling and debt ceiling drama,” wrote Keith Lerner, co-chief investment officer at Truist.
Technology stocks were particularly hard hit as bond yields rose. Rising yields often signify that investors see inflation and strong economic demand in the future. The 10-year Treasury yield ticked up to 1.5% from 1.48%.
Indeed, risks still haven’t gone away. Supply chain constraints are disabling some companies from meetings sales goals, while higher costs associated with this are eating into profit margins. Higher corporate taxes could be on the way. Plus, bond yields are expected to keep rising, which makes future profits less valuable.
As for the S&P 500, October can be a difficult month, especially after a rough September. When the index falls in September, the S&P 500 rises only 54% of Octobers historically, according to Bank of America, with an average decline of 0.4%. The bank said October is also one of the more volatile months.
Meanwhile, the S&P 500 is down just over 4% from its all-time high, hit on Sept. 2. Technically, a correction is a 10% drop. “I do not think we have seen the bottom yet in stocks,” wrote Jay Pestrichelli, CEO of ZEGA Financial. “While September’s stock market declines were uncomfortable, they were far from a traditional 10% market correction.”
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Overseas, Hong Kong’s
Hang Seng Index
fell 2.2% with markets in mainland China closed for a holiday. The pan European
Stoxx 600
was up 0.2%.
Hong Kong was rocked as shares in heavily indebted property developer
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