U.S. stock market logs worst day since May
The S&P 500 fell 1.7 percent overall on Monday but dropped 2.9 percent at its lowest point during the afternoon, following two consecutive weeks of losses. The Dow Jones Industrial Average has also fallen for the past three weeks, reporting a 970-point drop on Monday. China’s largest real estate developer, Evergrande, is due to pay interest this week, but the company might default on payments for its $300 billion debt. This uncertainty, combined with concern over the delta variant slowing U.S. economic growth and the Federal Reserve possibly tightening monetary policy, has worried investors.
Does this signal a crash? When Lehman Brothers declared bankruptcy in 2008, its collapse triggered the Great Recession. Analysts think Evergrande’s downfall is unlikely to cause a similar crash, and some strategists said the markets are overdue for a pullback and minor correction. Since most of Evergrande’s business is based in China, the White House said it is unlikely to harm U.S. stocks significantly. An S&P Global Ratings report said that if Evergrande defaults, it will affect markets but most likely will not spark a series of other defaults.
Dig deeper: From the WORLD archives, listen to economist David Bahnsen discuss lessons from the 2008 crash on The World and Everything In It podcast.
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