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Market ends September with losses, indexes complete six-quarter gaining streak

By Arghyadeep on Oct 01, 2021 | 05:31 AM IST

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All three major indexes fall in September after adding about USD600 billion in value since summer

Nasdaq worst performer with 5.6% fall followed by S&P 500 falling 4.8% and Dow sliding 4.2%

U.S. stocks dropped on Thursday, on the way to end the volatility of September and wrap up its sixth consecutive quarter of gains, a run not seen since 2017.

All the three major U.S. indexes started the day higher but slid since then as the session continued.

The S&P 500 closed after dropping 1.19%. The Dow Jones Industrial Average shed about 547 points or 1.59%. The technology-heavy Nasdaq Composite fell 0.44%.

Long stretch of gains

After the long stretch of gains and adding about $600 billion in value since the summer, September was the month when anxiety in the market finally came forward, forcing all the three major indexes to fall.

The S&P 500 fell about 4.8% in September. The Dow Jones Industrial Average went down 4.2% for the month, while the Nasdaq Composite lost 5.6%.

Concerns around various factors are making investors anxious lately, including increasing Delta variant COVID-19 cases this quarter, the delay in getting more efficient remedies for the disease and the slowing growth of the U.S. economy.

Recent uncertainties in Washington are also growing over the coming House vote on a $1 trillion infrastructure bill.

Another factor that is bugging the investors is the suspension of the debt limit, which the House voted on Wednesday to suspend until December 2022, but is expected to fail in the Senate as it would need 60 votes to advance in the chamber that is split 50-50.

Also, markets are fearing contagion from Chinese debt-laden property developer Evergrande Group.

End of bond buying

The combination of these factors was enough to knock the U.S. stock market off its 2021 winning streak in September.

Last week, the Federal Reserve signaled that it will start reducing its bond-buying as soon as November and possibly begin to raise interest rates next year.

The expectation for rising interest rates and higher inflation primarily due to surging energy prices has led some investors to sell government bonds, whose yields have been near historically low levels.

The yield on the benchmark 10-year Treasury yield note has surged over the past week, however, the selloff cooled Thursday, and the yield dropped to 1.528% from 1.540% the previous day.

Picture Credit: LA Times

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