Investors Needed a Catalyst to Shatter This Market Calm
Markets were ready for a fall and China Evergrande has obliged, though U.S. stocks have gone only halfway to a correction.
Something had to blow.
Photographer: Alexander Scheuber/Getty Images
Fleetingly, the U.S. stock market managed to get halfway to a correction. By 3:30 p.m. New York time Monday, the S&P 500 stood 5.1% below its all-time peak from earlier in September, on an intra-day basis. Then came the now-customary dose of “buy-the-dip” buying into the close. As you read this, the S&P is almost exactly 4% below its record; not even halfway to the 10% fall from peak to trough that is traditionally taken to denote a “correction.” As one wag put it in my Twitter feed, 40% of the way there means we’ve had a “corr”:
This was still the S&P’s worst day since May, sparked by problems for a property developer on the other side of the world. The situation at China Evergrande Group is certainly perilous, as I covered yesterday. It gives good reason for anyone to take a few more precautions against risks than they otherwise would. In addition to this, the day started with a big selloff in Hong Kong, followed by further falls for equity markets in Europe, ramming home for Americans that there was risk in the air. Monday was the first day that Evergrande would be unable to make debt payments in full and on time.