On Monday, August 23, 2021, a trader is working on the New York Stock Exchange's floor in New York.
The blue-chip Dow ended the week 0.6% better, ending a losing streak of three weeks. The S&P 500 rose 0.5% last week while the tech-heavy Nasdaq Composite edged down 0.02%.
Wall Street is having a rollercoaster week, despite a host of worries from China's debt crisis to Evergrande's real-estate giant Evergrande to Beijing's crackdown against cryptocurrencies to the Federal Reserve's signal of a rollback in monetary stimuli. However, the major averages were able to erase large losses and make small gains.
Stock futures rose overnight on Sunday, as investors waited for the end of volatile September.
Nationwide's chief of investment research Mark Hackett stated in a note that equity markets "continue to reflect a tug o war between bulls and bears." "The market recovery showed that the buy-the dip mentality is still valid."
As major averages have suffered modest losses, September has lived up to its reputation of volatility and weakness. The S&P 500 is down 1.5% and on track for its first negative month since January. The broad equity benchmark is 2% below its record high of Sept. 2. The Dow is down 1.6%, while the Nasdaq has fallen 1.4%.
In a note, Larry Adam, Raymond James' CIO, stated that "We continue to exercise caution, especially as we enter seasonally weakest parts of the year (late September/mid-October)." We will continue to be cautious given the robust economic growth. However, we are inclined to keep existing equity exposure and add opportunistically to weakening markets.
As lawmakers attempt to avoid a shutdown of the government, a default on U.S. bonds and the collapse of President Joe Biden’s ambitious economic agenda, investors are closely watching the Washington progress.
Nancy Pelosi, House Speaker, stated Sunday that she expected the $1 trillion bipartisan Infrastructure Bill to pass this week. However, voting may be delayed from the original Monday deadline.
To avoid a shutdown, Congress must pass a budget by September 31st. Before the U.S. defaults on its debt for the second time, lawmakers must find a way to raise or suspend the October debt ceiling.
After dropping 5% Friday, bitcoin recovered about 2% to $43,454 elsewhere. The sell-off came after China's central bank declared all cryptocurrency-related activities illegal.