U.S. Stocks Drop With Concerns Over Energy Prices, Bond Program

“These concerns around what’s going on with Evergrande and China and a possible default there are having spillover effects into the European markets,” said Mike Bell, a strategist at JPMorgan Asset Management in London. But he said it appeared the market was too worried.

“Could you get more volatility over the next month or two? Yes, that’s certainly possible,” Mr. Bell added. “But when we look at China at the moment, we still think the earnings outlook — outside of companies like Evergrande —  for the broader market remains very positive.”

High natural gas prices in Europe are sending energy bills soaring and causing factories, such as those that make fertilizer, to shut down in Britain. Smaller energy companies in Britain are seeking government bailouts. And the price of iron ore, the main raw material in steel, has dropped, sending the stocks of mining companies sharply lower.

This week, more than a dozen central banks, including those in Japan, Britain and Switzerland, will meet and set policy.

But most traders are likely to be focusing on the Federal Reserve, which is expected on Wednesday to discuss a timeline for when it will begin slowing bond purchases that are aimed at shoring up the economy. Some economists expect the Fed to signal that it will start winding down the bond purchases later this year. The central bank could then begin to raise interest rates the following year. But a slowdown in hiring, especially among hospitality and leisure workers, could weigh on the recovery and delay the central bank’s reduction of stimulus.

Article source: https://www.nytimes.com/2021/09/20/business/stock-market-federal-reserve.html