Stocks wobble but remain on track for quarterly gains despite recent sell-off

All the three major indices started the day higher but declined as the session continued. The S&P 500 recently embraced the flat line after swinging between small gains and losses. The Dow Jones Industrial Average lost nearly 150 points, or 0.4%. In contrast, the technology-heavy Nasdaq Composite climbed 0.5%.

After prolonged gains for the US stock market this year, September was the month when investor concerns finally came to a head, leaving all three major indices lower. The S&P 500 has fallen 3.6% month-over-month, at its worst monthly loss since last September. The Dow Jones Industrial Average is down 3.2% for the month, while the Nasdaq Composite is down 4.5%.

Still, the S&P 500 is on pace to register gains for the sixth consecutive quarter.

Investors have had to navigate an uptick in delta variant Covid-19 cases this quarter, with concerns that higher inflation—driven by a rise in energy prices—will last longer than expected. Also, there was a possibility of infection in dogging markets from debt-laden property developer China Evergrande Group.

The stock has faced a particularly rocky stretch since the Federal Reserve signaled last week that it would begin reducing its bond-buying as soon as November—and possibly raising interest rates next year. will start.

“We have entered a slightly more difficult, more winning phase of recovery, and a number of headwinds are emerging against the upward march we have seen since last year,” said Sebastian Mackey, a multiset fund manager at Invesco.

Interest rate hikes and expectations of higher inflation – also reflected in rising oil and commodity prices – have prompted some investors to sell government bonds, whose yields have been near historically low levels. The sell-off cooled on Thursday, with the yield on the benchmark 10-year Treasury note falling to 1.532% from 1.540% on Wednesday. Yields and prices move inversely.

“People realize that the only asset with a real expected return is equities. Markets tend to grind more on this sort of alternative environment,” said Edward Park, chief investment officer at UK-based investment firm Brooks McDonald. Will not last when central banks make it clear that they are raising rates. regardless of development background.”

Investors have also recently sold off shares of large technology companies, which tend to outperform in low-yield environments because investors have more incentive to buy shares and wait for higher gains in the future. However, some of that trend reversed on Thursday. Netflix gained 2.3%, while Advanced Micro Devices gained 3%.

Shares of Virgin Galactic Holdings rose 14% after top US aviation safety regulator said it has approved the company to operate space flights again. Shares of Bed Bath & Beyond sank 25% after the retailer lowered its guidance for the year as it reported slower traffic to its stores due to the Delta version and supply-chain challenges.

Meanwhile, Thursday’s data showed the number of Americans applying for unemployment benefits for the first time in the week ending Sept. 25 rose to 362,000 from 351,000 last week.

Benchmark Brent crude futures fell 1% to $77.33 a barrel in international energy markets.

Overseas, the pan-continental stock Europe 600 gained 0.1%.

Indices in Asia closed with a mixed performance on Thursday. China’s Shanghai Composite rose 0.9% and South Korea’s Kospi rose 0.3%. Hong Kong’s Hang Sang fell 0.4%. Chinese growth in the quarter and concerns about the resilience of its property sector also weighed on the global sentiment.