Stocks End September in Decline, Futures Point to Further Losses

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Key Takeaways

• US stock indexes declined by 4% or more in September, the worst month since March 2020
• Stock futures fell in pre-market trading, indicating a continuation of yesterday’s losses

Stocks Finish September with Steep Losses

Stocks on Wall Street finished the month of September with heavy losses across the board. Inflation jitters, the Evergrande debt crisis and signs the Federal Reserve may reduce bond-buying dragged major indexes to the downside. As a result, this led to the worst monthly performance for equities since March 2020.

The three major indexes, S&P500, Dow Jones Industrial Average and Nasdaq Composite, finished the final day with steep declines. Investors were optimistic to start the day with some green but buying momentum quickly faded and stocks turned negative.

The Dow Jones Industrial Average tumbled 546.80 points or 1.59%, to end the day and month at 33,843.92. In addition, the S&P500 fell 51.92 points, or 1.19%, to finish at 4,307.54. And finally, the Nasdaq Composite dropped 63.86 points, or 0.44%, to settle at 14,448.58.

Losses on Thursday were broad-based. In more detail, companies from real-economy sectors such as banking, travel, and oil and gas weighed on the benchmark averages. In contrast, big tech names were able to gain modestly.

S&P500 Ekes Out a Minor Gain in the Quarter

After a months-long stretch of solid gains boosted by monetary stimulus and economic expansion, the rally in stocks finished in September. As a result, investor worries over the short-term outlook weighed on the market sentiment.

Overall, for September, the S&P500 tumbled 4.8% but managed to eke out a marginal gain of 0.2% for the third quarter. Furthermore, the Dow Jones Industrial Average slipped 4.3% in September, while the Nasdaq Composite fell 5.3% as short-selling intensified. For the past three months, both the 30-stock Dow Jones and the tech-heavy Nasdaq Composite suffered their first quarterly losses since the first three months of 2020.

Uncertainty Ahead for the Market

As investors prepare to enter the final quarter of 2021, the forecast for equities is looking uncertain. To this end, the US Federal Reserve has said it could begin tapering, or unwinding, the easy-money policies. On that note, investors fear the removal of the consistent monetary support could threaten the record-high valuations of stocks. The US central bank has been buying bonds at a pace of $120bn per month.

In addition, with inflation at a 13-year high, consumers and businesses face difficulties making large purchases. Furthermore, higher prices, coupled with the expectation of interest rate increases, is prompting investors to sell government bonds, whose yields have been sitting near historically low levels.

Stocks and Cryptos on Friday

By the looks of it, it appears that the volatility and choppy trading will not end with the start of the final quarter today.

US stocks futures turned negative to face their first day of regular trading for October. To this end, futures contracts tied to the Dow Jones dropped more than 200 points. Also, S&P500 futures and Nasdaq futures were lower by 0.6% each.

In other markets on Friday, cryptocurrencies opened for trading relatively flat. That said, Bitcoin hovered near $44,000 per coin. However, the original cryptocurrency slipped about 6% in September but gained more than 30% in the last quarter.