Stocks Slip as Investors Weigh Debt Ceiling, Evergrande

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Nasdaq declines as technology stocks return after the opening bell

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In corporate news, Tesla shares rose nearly 3.6% after the auto maker reported record deliveries in the third quarter. Merck climbed 3.2% after the drug company said its antiviral pill was effective against Covid-19 in a late trial. Vaccine makers slipped, with Moderna down 4.3% and Novavax down 3.3%.

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Investors are 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.”

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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.

The yield on the benchmark 10-year Treasury note rose to 1.503% on Monday from 1.464% on Friday.

Global benchmark Brent crude retreated 0.4% before ticking up 0.8% and was trading recently at $79.90, as investors await Monday’s meeting of OPEC members. According to analysts at Rystad Energy, some traders are pricing in the possibility of a large increase in production output, which will impact oil prices.

Overseas, the pan-continental stokes Europe 600 gained about 0.2%. 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.

—Gunjan Banerjee contributed to this article. Write to Anna Hertenstein at [email protected]

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