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On Friday, the Dow Jones Industrial Average turned in three straight weeks of losses for the first time since September 2020. The S&P 500 is lower by 3.7% and the Nasdaq Composite has fallen 3.6%. Stocks have struggled so far in September in line with historical trends. "Stalemates in Congress on the debt ceiling, worries on policy changes or mistakes in monetary policy, and a litany of proposed tax increases have dampened the mood for investors. When this occurs, corrections happen." "We are in an information vacuum at the moment," said Jamie Cox, managing partner at Harris Financial Group. The Cboe Volatility index, Wall Street's fear gauge, jumped above the 28 level on Monday, the highest since May. On Friday, University of Michigan's September consumer sentiment index came in at 71, just slightly above the August level that was the lowest in 9 years. Wilson said he believes a "destructive outcome" is looking more likely that results in a pullback of 20% or more. "We point to downside risk to earnings revisions, consumer confidence and PMIs."
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"We think the mid-cycle transition will end with the rolling correction finally hitting the S&P 500," wrote Mike Wilson, Morgan Stanley's chief U.S. Bank of America and JPMorgan Chase dropped 3.4% and 3%, respectively. (1 basis point equals 0.01%)īig bank stocks took a hit as the falling rates may crimp profits. The move pushed the 10-year Treasury yield down by 6 basis points to 1.31%. 2.īond prices gained as investors sought safety. The index closed the session 4.1% below its record high from Sept. It's been a long time since the market has faced a sell-off of this magnitude as investors continued to buy the dip with fiscal and monetary stimulus backstopping the markets. Monday's sell-off briefly pushed the S&P 500 5% below its last record on an intraday basis. Congress returned to Washington from recess rushing to pass funding bills to avoid a government shutdown. Investors are also concerned about brinkmanship in DC as the deadline to raise the debt ceiling approaches.History shows the selling tends to pick up in the back half of the month. September has the worst track record of any month, averaging a 0.4% decline, according to the Stock Trader's Almanac.Covid cases because of the delta variant remain at January levels as colder weather approaches in North America.The Federal Reserve begins a two-day meeting Tuesday and investors are worried the central bank will signal it's ready to start pulling away monetary stimulus amid surging inflation and improvement in the job market.The benchmark Hang Seng index plunged 4% with embattled developer China Evergrande Group on the brink of default. Hong Kong equities saw a big sell-off during the Asia trading session on Monday.
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