S&P 500 Drops 4.8% in September Amid Inflation Concerns... Largest Decline Since March Last Year

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] The New York stock market closed September with its largest drop this year. Although the risk of a temporary U.S. federal government shutdown was averted, the debt ceiling increase issue remains, and with concerns over rising inflation, the October market outlook also appears pessimistic.

On the 30th (local time), the Dow Jones Industrial Average fell 546.80 points (1.59%) from the previous close to 33,843.92, the S&P 500 index dropped 51 points (1.19%) to 4,307.54, and the Nasdaq index declined 63.86 points (0.44%) to 14,448.58.

On a monthly basis, the S&P 500 index's decline reached 4.8%, marking the largest monthly drop since March last year when the COVID-19 pandemic began. The Dow fell 4.3%, and the Nasdaq dropped 5.3%. The rise in Treasury yields led technology stocks to lead the decline, resulting in a relatively larger drop in the Nasdaq.

The U.S. 10-year Treasury yield fell to the 1.4% range in the afternoon, but it is too early to be reassured.

The worsening employment situation also dampened risk asset investment sentiment. The Department of Labor announced that initial jobless claims last week increased by 11,000 to 362,000 compared to the previous week. Weekly jobless claims exceeded the Dow Jones consensus estimate of 335,000 and rose for the third consecutive week.

The U.S. GDP growth rate for the second quarter was finalized at an annualized 6.7% compared to the previous quarter. The preliminary GDP growth rate was 6.6%.

The "meme stock" Bed Bath & Beyond, popular among individual traders, fell 22% as its earnings fell short of expectations. The company's poor performance was attributed to supply chain issues.

Used car retailer CarMax also dropped 11% amid evaluations that its earnings were below expectations.

Pharmacy chain Walgreens Boots Alliance and retailer Home Depot also led the Dow's decline with drops of 3.4% and 2.6%, respectively.

Financial stocks were also weak. Goldman Sachs shares fell 1.7%, and JP Morgan dropped 1.3%.

New York market experts are closely monitoring the situation in October following the September slump. Typically, the October stock market seeks a reversal from the September weakness ahead of the year-end.

According to the Wall Street Journal, Wall Street experts are revising earnings forecasts downward due to supply chain bottlenecks and the spread of the Delta variant. Citigroup's economic shock index, which analyzes whether U.S. companies' earnings reports exceeded or missed expectations, fell to its lowest level since June 2020.

More companies are expressing concerns about inflation. Among S&P 500 companies that announced earnings since June, 224 cited inflation concerns. This is the largest number since FactSet began tracking in 2010.

This content was produced with the assistance of AI translation services.