Stock market tumbles as Wall Street fear centers on China
The DOW Jones Industrial Average and the broader US stock market plummeted on Monday amid Evergrande’s debt crisis.
The DOW fell 820 points, while the S&P and Nasdaq saw significant dips as well.
Evergrande was supposed to pay the interest on some of its substantial bank loans Monday, according to Bloomberg. The company will also have to pay interest on two bonds worth more than $100 million later this week.
Why does a foreign real estate company’s debt non-repayment affect American markets?
The massive amount of money borrowed by Chinese companies has long been considered an impending threat to market stability. Investors fear the exposure that banks might have to Evergrande and similar companies.
Meanwhile, some experts say the market was due for a correction after stocks hit record highs.
“On a down market day, it’s easy to look to the nearest headline like Evergrande and attach a cause and effect,” wrote The Bahnsen Group’s chief investment officer, David Bahnsen, in a note to clients. “But this market has experienced almost no downside volatility for a long time and a pullback was long overdue.”