Wall Street is starting the week in the red, with the Dow and other major indexes sharply lower as investors grappling with a wide range of concerns.
The Dow (INDU) dropped more than 350 points, or 1.1% around midday. The S&P 500 (SPX), a broader gauge of the US stock market, was down 1.5%. The Nasdaq Composite (COMP) fell the most with a 2.4% decline. Tech stocks are leading losses. There are plenty of headwinds for America’s equity investors. Top of mind is the debt ceiling fight in Washington, as President Joe Biden spoke on the home-grown debt crisis this morning. He continues to push Congress to raise the debt ceiling; Congress has until October 18 to increase the country’s borrowing limit.
“The United States pays its bills and it always has,” Biden said. Raising the debt limit is usually a bipartisan undertaking, and it should be. But that is not happening today,” he added. “The Republicans in Congress — what they’re doing today is so reckless and dangerous in my view. Raising the debt comes down to paying what we already owe, what has already been acquired, not anything new,” Biden said during his remarks. Meanwhile, worries about prolonged high inflation are leading investors to rotate out of tech stocks, which had performed strongly during the worst of the pandemic. A key measure of inflation hit a new 30-year high on Friday. While stocks are tumbling, US Treasury yields — which track inflation and interest rate expectations — are ticking higher at 1.48%. Bond yields and prices move inversely to each other.
Energy stocks were the only bright spot in the market Monday. Oil prices rallied to their highest level since 2014 and lifted the sector higher. US oil prices are up nearly 3% around $78 per barrel after the Organization of Petroleum Exporting Countries and its allies reaffirmed their existing production plan to raise monthly production by 0.4 million barrels per day in November. “In the longer-term outlook, the rising price of crude oil is only going to exacerbate inflationary pressures, specially for some emerging market economies like India,” said ThinkMarkets analyst Fawad Razaqzada in a note to clients.