Getty Images / Xinhua News Agency
The increasing fear of contagion from Evergrande's debt crisis, which has cost $305 billion, pushed US stocks to their lowest point Monday.
This is despite a historically low September for stocks.
Investors also face increasing uncertainty about the US debt ceiling.
Subscribe to our daily newsletter 10 Things Before The Opening Bell.
The Evergrande debt crisis in China continues to be a concern for the US and stocks fell Monday as investors feared that the debt limit would rise before the October deadline.
S&P 500 and Dow Jones both experienced their worst day since October last year, with Dow Jones falling close to 1,000 points to its lowest point. Both indexes experienced a more-than 5% drop from September 2nd highs.
Evergrande, China's second-largest property developer, has more than $300 billion of liabilities. This is due to its contribution to China's growth over the past decade. Many speculate that Evergrande will not be able to pay its debts due to a debt crunch of $7 billion in 2022. The Chinese government has yet to assist the company.
A divided Congress has been unable raise the debt ceiling, and Republicans and Democrats show little willingness to compromise. Or, Congress risks defaulting on its obligations if it doesn't raise the debt limit by October.
Here are the US indexes at 4:00 p.m. ET closes Monday
This article will cover everything you need to know regarding the Evergrande debt crisis and why stocks are being affected by it. Andrew Left, a former short-seller, warned about the property developer back in 2012.
According to Katie Stockton, Fairlead Strategies technical analyst, the risk-off mood in stocks could cause a prolonged period heightened volatility as S&P 500 tests critical support levels like its 50 day moving average.
On Monday, cryptocurrencies plunged. Both bitcoin and ether fell more than 5% below their key support levels. The crypto market sell-off highlights the strong correlation it has with stocks during down-periods.
Coinbase plunged as high as 6% following the abandonment of its crypto-lending products plans. This was subject to a Twitter spat between CEO Brian Armstrong and SEC officials.
El Salvador took advantage the crypto sell-off and purchased 150 more bitcoins Monday. This brought its total holdings up to over $30 million.
Three top analysts stated that despite the recent stock market decline caused by Evergrande's debt crunch, this is not China's "Lehman Brothers moment" and that the Chinese government could step in to manage the situation and protect its economy.
Oil prices fell. West Texas Intermediate crude fell as high as 2.19% to $70.25 a barrel. Brent crude oil, the international benchmark for oil, dropped 1.79% to $73.99 a barrel.
Gold rose as high as 0.65% to $1,762.70 an ounce.
