Stocks Fall as Investors Weigh Debt Ceiling, Evergrande

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The Nasdaq fell more than 2% as technology stocks returned

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Monday’s move continued a recent trend of underperforming at large tech companies. Investors have given up on stocks of high-flying stocks as bond yields have soared. Higher yields make future tech companies’ profits less attractive.

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The sector has been particularly volatile in recent sessions, after making huge gains since the start of 2020. Monday’s sale puts the tech-heavy Nasdaq Composite on track for a third drop of at least 2% since early September.

Facebook shares fell nearly 5.9% on Monday, with its losses worsening in the afternoon. Facebook entities WhatsApp, Instagram and Facebook were not accessible to users on Monday morning, with users receiving error messages while trying to access the sites. Facebook whistleblower Frances Haugen is set to testify before Congress on Tuesday and her detailed problems with the social media company. Shares of Alphabet dropped 3.4%. Netflix dropped 2.7%. All three have underperformed the S&P 500 over the past month.

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The yield on the benchmark 10-year Treasury note rose to 1.477% from 1.464% on Friday.

Monday’s move The recent volatility in the stock market continues. Investors are also closely watching talks in Congress, as lawmakers debate debt limits ahead of this month’s deadline so the government can pay its bills. Meanwhile, Democrats are considering scaling back the next spending package to improve its chances of passage. The Biden administration is also set to unveil its China trade policy after a review of import tariffs.

David Stubbs, global head of investment strategy at JPMorgan Private Bank, said, “You’ve got a combination of uncertainty from DC, continued headlines from China about Evergrande and against a backdrop where you’ve seen bond yields rise. ” “All of this should eventually be manageable but that’s the problem with policy uncertainty, especially regarding the world’s two largest economies.”

In corporate news, Tesla shares rose nearly 1.3% after the auto maker reported record deliveries in the third quarter. Merck climbed 2% after the drug company found its antiviral pill effective against Covid-19 in a late trial. Vaccine makers slipped, with Moderna down 6.3% and Novavax down 2.1%.

Shares of China Evergrande and its asset-management arm closed trading in Hong Kong on Monday. The subsidiary said it was pending an announcement about a potential takeover bid.

Another Chinese developer, Hopson Development, also halted its shares. It said it was pending an announcement regarding a transaction involving an unnamed Hong Kong-listed target company.

“While it may provide some short-term financing, markets are still raising questions about what the longer-term picture is for the company,” said Kiran Ganesh, a multiple-asset strategist at UBS Asset Management. Evergrande has more than $300 billion in liabilities that investors feel are unlikely to pay off.

In commodity markets, oil prices rose as OPEC and the Russia-led oil conglomerate agreed to continue increasing production in measured phases, deciding against opening the tap more widely. West Texas Intermediate crude, the US benchmark, rose nearly 2.4% to $77.71 in recent trade.

Overseas, the pan-continental Stokes Europe 600 slipped nearly 0.5%. Volvo Cars said it was planning an initial public offering and expects to list its B-class shares on the Nasdaq Stockholm Exchange.

In Asia, most major benchmarks retreated. Hong Kong’s Hang Seng index fell 2.2%, while Japan’s Nikkei 225 index fell 1.1%. Markets in mainland China are closed until Friday for the Golden Week holiday.

Write to Anna Hirtenstein at [email protected] and Gunjan Banerjee at [email protected]

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