Stocks on Wall Street tumbled again on Friday, with the S&P 500 heading for a second consecutive weekly drop and extending a slow decline that has been weighing on the stock market all month.
The index fell about 0.8 percent by midday, on track for its eighth daily drop since it hit a record on Sept. 2. The Nasdaq composite fell 0.9 percent, while stocks in Europe were also broadly lower.
Mining, chemical and resources companies led the declines, and oil prices also slipped, moves that usually reflect concerns about global growth. Also lower on Friday were the largest technology stocks — Apple, Alphabet, Facebook and Microsoft. Along with Amazon, they make up more than 20 percent of the market value of the S&P 500 and have an extraordinary amount of pull over the direction of the stock market. All four were down by 1.5 percent or more, and Amazon was also slightly lower.
The decline of S&P 500 since its record, about 2 percent in total over two weeks, hasn’t been dramatic, but it marks a clear shift in the market’s tone. Before this month, Wall Street had been enjoying a seven-month run that had lifted stocks more than 20 percent, as investors seemed to shrug off any bad news.
Analysts have struggled point to any single reason for the September funk, but they do point to several factors that could be worrying investors as they consider what to do next. Here are a few.
The Fed’s decision on bond buying: The central bank is holding its next policy meeting next week, and it is expected to send a clear signal on when it plans to start winding down its purchases of government bonds. That program, an emergency response to the pandemic, is meant to keep cash flowing through the economy.
Changing expectations about the economy: Even if the U.S. economy seems to be weathering the resurgence of Covid, the latest data has fallen short of analysts’ expectations. One measure of whether reported economic numbers are better or worse than analysts expected, the Citigroup U.S. Economic Surprise Index, is at its most-negative level since the start of the pandemic last year.
Supply chain trouble: The outbreak of the highly contagious Delta variant of the coronavirus was particularly serious in Asia, and it delayed the rebuilding of supply lines from manufacturers to American companies. In some cases it made the snarls worse.
China’s changing regulations: Investors have grown wary of a wave of new restrictions from Beijing on subjects like online gaming and data sharing by tech companies. The latest blow came to American casino operators that count on Macau, a special administrative region of China and a gambling haven for Chinese high rollers, for their profits. After the local government there signaled that it would begin to tighten restrictions, shares of companies like Wynn Resorts and Las Vegas Sands plunged.
A plan to tax buybacks: Senate Democrats seem to be coalescing around a new tax on stock buybacks by companies, something that could potentially weaken a key source of demand for stocks.
The debt ceiling: Not raising the U.S. debt limit would effectively amount to a default on the U.S. government’s debts, and yet wrangling and rhetoric around it are likely to worsen in coming weeks. Almost no one expects that the government will actually default, but past debt-ceiling fights, such as a particularly noisy one in 2011, have proved unsettling to investors sending stocks sharply lower. Analysts say that until the ceiling is raised, investor exuberance could be hard to find.