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US stocks end sharply lower on China property fears

Published: 16:05 20 Sep 2021 EDT

US flags outside NYSE

4.05pm: Dow sees biggest one-day selloff in nearly a year   

US stocks kicked off the week on a sour note, finishing the day down sharply as investors feared contagion from the troubled China property market.

At the close, the Dow sank 615 points to 33,970, while the S&P 500 fell 75 points at 4,358 and the tech-heavy Nasdaq dropped 330 points, or 2.2%, to 14,714.    

The wave of global equities selling began overseas on fears that major Chinese real estate developer China Evergrande Group is on the brink of default.

12:10pm: US equities down deeply on Hong Kong woes

US stocks fell sharply midday as Hong Kong equities faced a big sell-off.

The benchmark Hang Seng index plunged 4% with embattled developer China Evergrande Group on the brink of default.

As of noon, the Dow Jones Industrial Average was down 748 points, or 2.16%, at 33,846, while the broader-based S&P 500 fell 96 points, or  2.16%, to 4,336.

The tech-heavy Nasdaq, meanwhile, dropped 395 points, or 2.63%, to stand at 14,647.

“It is definitely a ‘sea of red’ kind of day for global markets, the first time that phrase has been used for quite a while,” said Chris Beauchamp, chief market analyst at online trading group IG.

“US markets opened the day firmly in the red, joining their already heavily-beaten down European cousins, with no sign as yet that the wave of selling has come to an end. Given the strength of this move to the downside it looks like we have at least a couple days more of selling to go before any kind of counter-wave develops, especially with a potential game-changer of a Fed meeting on Wednesday. After months of relative quiet, the market has finally woken up, providing an opportunity in due course for dip buyers, perhaps once the Fed meeting is out of the way.”

11.05am: Proactive North America headlines:

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9.45am: Wall Street plunges at open

Wall Street shares plunged at the New York open, as expected, as investors took flight from risk assets.

The Dow Jones tanked over 507 at 34,077. The  S&P 500 fell over 63 points at 4,3698.

The tech heavy Nasdaq index dropped over 255 points at 14,789.

"Given the huge uncertainty, investors are unwilling to take any risks and we have seen the impact of that on the markets already so far today," said Fawad Razaqzada, analyst at Thinmarkets.com

He noted there will be  a few major Central Bank statements this week as the "US Federal Reserve, Bank of England, Bank of Japan and Swiss National Bank all decide on monetary policy. 

"We will also have a few potential market-moving data, including the latest manufacturing and services PMIs," he added.

7.12am: US stocks seen starting much lower

US benchmarks are seen plunging at the open on Monday as traders eye the Fed policy meet, which starts on Wednesday, to look for clues as to when tapering of stimulus measures will start, as well as manufacturing and services data.

Futures for the Dow Jones Industrial Average are down 537 points, or 1.59%, while the S&P 500 futures are down over 58 points, or 1.33%. Contracts for the Nasdaq exchange are off more than 164 points or 1,07%.

On Friday, US stocks finished lower - the third 'down week' in a row - with the DJIA shedding 166 points or 0.48% at 34,584. The Nasdaq dropped 137 points to 15,043. The S&P 500 experienced a smaller decrease though losing 41 points to end at 4,432

"The Federal Open Market Committee could easily justify backing away from its indication in July that it might be appropriate to begin reducing its asset purchases this year," said Michael Moran, analyst at Daiwa Capital Markets.

"The acceleration in the number of Covid cases has created downside risks for the economy, with the August employment report raising the possibility of an abrupt slowdown. In addition, the August CPI provided support for the Fed view that the recent pickup in inflation will be transitory. One could easily argue for patience in making important decisions."

In London, FTSE 100 is also lower, off in midday Monday trading, down 1.66%, at 6,848.

Five more things to watch for on Monday:

The FDA's 'Vaccines and Related Biological Products Advisory Committee' voted against recommending a third dose of the coronavirus (COVID-19) vaccine developed by Pfizer (NYSE:PFE) Inc and the German biotech BioNTech to the general population. Pfizer (NYSE:PFE) shares fell 0.3% to $43.78 in after-hours trading, while BioNTech shares dropped 2.8% to $349.00.

The US housing market index for September is scheduled for release at 10am. ET. The housing market index, which declined to 75 in August, is expected to hold at the same level this month.

Before the New York bell, AMC Entertainment was among the biggest losers, falling over 5 %.

The USA now has the highest number of coronavirus (COVID-19) cases and deaths in the world, with total infections in the country exceeding 42,087,480 with around 673,760 deaths. India has reported a total of at least 33,478,410 confirmed cases, while Brazil confirmed over 21,239,780 cases.

Wall Street expects Lennar (NYSE:LEN) Corp to report quarterly earnings at $3.28 per share on revenue of $6.86 billion before the opening bell. Lennar (NYSE:LEN) shares fell 0.4% to $100.90 in after-hours trading.

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