Home Finance News September Stock Market Downturn Causes Market Turmoil

September Stock Market Downturn Causes Market Turmoil

September Stock Market Downturn Causes Market Turmoil

Investors are growing increasingly spooked as stocks face a triple whammy of rising bond yields, soaring oil prices, and slowing growth. This widespread sell-off is impacting even once-loved mega-cap tech companies. The market turmoil may also put pressure on President Biden’s approval ratings, particularly regarding his handling of the economy. The S&P 500 saw a slight gain after hitting a three-month low, while the Nasdaq retreated to levels last seen in late May.

There are three key factors contributing to investor concerns. First, oil prices are approaching $100 per barrel, which is worrisome for Federal Reserve officials combating inflation. If rising energy prices further increase inflation, the central bank may decide to raise borrowing costs. Second, investors are also dumping bonds, causing yields on 10-year Treasury bills to reach a 16-year high. This could have ripple effects throughout the economy as long-term loans often track the yield on T-bills. Lastly, the once-thriving AI-driven tech rally is fading, leading to worries that the AI investor fervor was a potential bubble. Weakening performances from tech giants like Micron and concerns about valuations are contributing to market bearishness.

In addition to these concerns, other events are adding to the downbeat mood. Hollywood studios and striking actors will resume talks after the Writers Guild of America voted to end their separate strike. Trading in Evergrande, a highly indebted Chinese real estate developer, has been suspended following reports that its founder is in police custody. U.S. investigators are also broadening their inquiry into Swiss bank breaches of Russian sanctions, focusing on how UBS and Credit Suisse handled the accounts of sanctioned clients. Furthermore, GameStop has named billionaire activist investor Ryan Cohen as its CEO in an attempt to turn around the struggling retailer.

On the tech front, Meta, a leader in AI research, has unveiled new consumer-facing AI features for its products, including Instagram and WhatsApp. Meta’s offerings, such as a chatbot assistant and a set of chatbot “characters” featuring the likenesses of celebrities, aim to entice users amid stiff competition. However, Meta is playing catch-up due to caution surrounding potential misuse of the technology, as the company has been criticized for spreading misinformation in the past.

Efforts to avoid a government shutdown before Saturday’s midnight deadline have made little progress, with hard-line Republicans signaling their intent to block temporary funding plans. This disunity among House Republicans adds to the uncertainty of a potential shutdown.

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