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Trackinsight: Wall Street falls ahead of Fed meeting

09/20/2021 | 09:00am EDT

Market recap including Wall Street sliding for the second-straight week, Chinese real estate giant Evergrande collapsing causing stocks to fall hard, and energy on the rise.

Week from 13 to 19 September 2021

Wall Street slid again for the second-straight week, marked by the quadruple witching day. The bellwether S&P 500 ended down 0.57% while the Dow Jones Industrial Average was flat. Small cap stocks outperformed their large-cap counterparts (Russell 2000 up 0.42%). Tech shares pulled the Nasdaq Composite index into the red (-0.47%) as positive economic data lifted Treasury yields and increased uncertainty over the timing of the Fed’s tapering.

China turns lower with Evergrande on the brink of default

Chinese stocks stumbled amid slowing growth and increasing regulatory concerns. This time Beijing sought to tighten its grip on Macau, the world’s biggest gambling hub. Additionally, the real estate giant Evergrande stock took a nosedive (-30%). China’s most indebted developer, with more than $300 billion worth of liabilities, announced that it could default quickly, forcing the central bank to provide massive cash injection into the banking system to try to calm markets.

The Shanghai Composite index fell 2.41% accordingly. By contrast, most other Asian markets finished in positive territory (Japan’s Nikkei: +0.39%, Korea’s Kospi: +0.47%, India’s Nifty: +.124%). In Europe, stock markets remained bearish (MSCI EMU: -0.97%, FTSE: -0.93%).

Materials and Utilities decline, Energy rebounds

The basic materials sector magnified its losses (-3.22%), with mining stocks adding pressure in the wake of an ongoing rout in commodities (copper futures down 4.63%, aluminum futures down 3.03%). Utilities also pushed the broader market lower (-3.11%) as well as industrials (-1.56%) and communication services (-1.24%), weighed down by Facebook (-3.69%). Information technology dropped 0.68% on worries of Fed tightening. Apple stocks were down 1.95% while Microsoft shares were up 1.41%, after the software giant raised its quarterly dividend by 11% and disclosed a new $60 billion buyback program.

Among the eleven S&P 500 sector indices, only two ended in the green. Energy (+3.31%) was the best performer thanks to higher oil and natural gas prices (WTI crude up 3.23%). Data indeed showed a larger-than-expected draw in weekly U.S. crude inventories. Consumer discretionary fared well too (+0.54%), though Amazon edged down 0.19%.

Slight rise in bond yields

Once again, U.S. and benchmark European government bonds closed lower. Yields on 10-year U.S. Treasury notes edged slightly higher from +1.341% to +1.363%. The 10-year Germany bond yield traded up 5bps at -0.28% while that of the 10-year France OAT closed above 0% (+0.053%).

Higher yields and stronger dollar (EUR-USD down 0.82%) hurt gold (spot price down 1.86% at $1,754.34/Oz), corporate investment grade bonds (-0.14% in Europe, -0.32% in the U.S.) and emerging debt (-1.31% in local currencies). In contrast, high yield bonds rose +0.19% in Europe and +0.10% in the U.S.

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© www.trackinsight.com 2021
Stocks mentioned in the article
ChangeLast1st jan.
APPLE INC. -0.81% 143.48 Delayed Quote.9.16%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) -0.43% 0.73972 Delayed Quote.-3.64%
BRITISH POUND / US DOLLAR (GBP/USD) -0.19% 1.37334 Delayed Quote.0.55%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.00% 0.8076 Delayed Quote.2.90%
DJ INDUSTRIAL 1.09% 35093.19 Delayed Quote.15.32%
EMU TOP 50 EQUAL WEIGHTED (GRTR, UHD) 0.00%End-of-day quote.0.00%
EMU TOP 50 EQUAL WEIGHTED (STRD, UHD) 0.00%End-of-day quote.0.00%
EURO / US DOLLAR (EUR/USD) 0.10% 1.16078 Delayed Quote.-5.03%
FACEBOOK INC -1.15% 330.28 Delayed Quote.18.89%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.47% 0.013269 Delayed Quote.-2.64%
KOSPI COMPOSITE INDEX -0.34% 3007.96 Real-time Quote.5.15%
LONDON BRENT OIL 0.23% 85.66 Delayed Quote.64.20%
MICROSOFT CORPORATION -0.32% 302.73 Delayed Quote.36.77%
NASDAQ COMP. -0.06% 14896.864046 Real-time Quote.15.59%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) -0.22% 0.707 Delayed Quote.-1.49%
NIKKEI 225 -0.15% 29025.46 Real-time Quote.5.92%
RUSSELL CO., LTD. 3.51% 3540 End-of-day quote.22.92%
S&P 500 -0.40% 4452.26 Delayed Quote.19.04%
S&P GSCI ALUMINUM INDEX 0.82% 203.2998 Delayed Quote.60.61%
S&P GSCI CRUDE OIL INDEX 1.13% 454.072 Delayed Quote.68.45%
S&P GSCI NATURAL GAS INDEX -2.71% 254.7992 Delayed Quote.120.56%
S&P/CITIC 300 INDEX -0.93% 4422.92 Delayed Quote.-2.81%
S&P/CITIC 50 INDEX -1.84% 4173.76 Delayed Quote.-8.84%
WTI 0.32% 83.48 Delayed Quote.69.35%
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