US Markets Suffer Sharpest Drop Since Mid-May

The government in Beijing has not stepped in to bail out Evergrande, seeing the firm as an example to other corporates giants saddled by debt — though angry protests by home buyers, workers, and others who are owed money could possibly put pressure on authorities to intervene.

Further to problems overseas, the Federal Reserve begins a two-day meeting on Tuesday that could see a decision made about when monetary stimulus of the economy may end, amid a spike in inflation and a steadily improving job market.

As the deadline to extend the debt ceiling draws nearer, investors are also fearful that partisan brinkmanship in Washington could make a government shutdown a distinct possibility.

The pandemic also remains a concern with cases of Covid-19 stubbornly remaining at levels last seen in January as the Delta variant continues to circulate causing large-scale hospitalisations and deaths, almost entirely among unvaccinated individuals. With both colder weather and flu season approaching there are worries about what measures may need to be taken over the winter to try and stem another surge in cases.

Monday’s sell-off saw the Dow dip to a session low, down 971 points, but the market recovered some of that by the close.

Microsoft, Google-owner Alphabet, Amazon, Apple, Facebook, and Tesla Inc were among the biggest drags on the S&P 500, but all of the 11 major sectors were lower, with economically sensitive groups such as energy down the most.

Stocks of US airlines with big international networks ended the day only slightly down, helped by the news that in November the government will relax travel restrictions for passengers from China, India, Britain, and many other European countries, provided they have received a Covid-19 vaccine.