Stocks fall, swelling September’s losses.



A long list of worries caught up with Wall Street in September, the stock market’s worst month since the early days of the pandemic.

After a 1.2 percent slide on Thursday, the S&P 500 ended down 4.8 percent for September, its sharpest monthly decline since March 2020 and one that snapped a seven-month streak of gains.

Until the recent decline, investors had shaken off the emergence of the coronavirus’s Delta variant, problems with a backed-up supply chain and persistent inflation, with the S&P 500 rallying to a Sept. 2 record and a dizzying 21 percent gain since the beginning of the year. But stocks started to slide as concerns grew about political gridlock leading to a U.S. debt default and as instability in China’s real estate market shook Wall Street.

With investors also eyeing the Federal Reserve’s plans to start slowing its purchases of government-backed bonds, yields on the 10-year Treasury note jumped to their highest levels in months, reaching 1.55 percent on Wednesday. By Thursday afternoon the yield was 1.52 percent.

Large technology stocks, which have an outsize influence on the major stock indexes and which typically fall as bonds become more appealing to investors, recorded double-digit drops. Apple ended the month nearly 10 percent off its Sept. 7 record. The tech-heavy Nasdaq composite fell 5.31 percent in September, including a 0.4 percent drop on Thursday.

Throughout the month, Treasury Secretary Janet L. Yellen warned of economic catastrophe if Congress did not raise the U.S. debt limit. The Treasury is expected to run out of cash in October, at which point things like Social Security payments and government paychecks would be delayed, and interest rates could spike.

Adding to jitters were concerns that a default by China Evergrande Group would ripple through global markets. The company, which has about $300 billion in debt, faced several payment deadlines. Those concerns eased somewhat in recent days, in part as the company said it was selling a stake it held in Shengjing Bank for about $1.5 billion, with the proceeds going toward paying down its debts.

But even with September’s drop, the S&P 500 remains more than 27 percent above its prepandemic record. Analysts have said throughout the month that a correction — a Wall Street term of art for a drop of more than 10 percent — would most likely be short-lived.

Retail stocks were among the worst performing on Thursday. Bed Bath & Beyond shares slid about 22 percent after the company slashed its sales forecast, saying that the recent rise in Covid-19 cases had led to a sharp slowdown in traffic to its stores and that costs and supply-chain problems were hitting its bottom line. The used vehicle retailer CarMax dropped nearly 13 percent, while Gap closed 8 percent lower.

Retailers are expecting delays and shortages of goods heading into the holiday shopping season, adding to higher labor costs and skyrocketing shipping fees. Consumer confidence is at its lowest level in seven months, the Conference Board reported on Tuesday.

Factories in Vietnam, the second-biggest supplier of apparel and footwear to the United States after China, have been forced to close or operate at severely reduced capacity as coronavirus cases surged. Power cuts and blackouts have also slowed or closed factories across China this week.

“Lingering supply chain constraints have become a major hurdle to inventory restocking,” Lydia Boussour, lead economist at Oxford Economics, wrote in a note. “Assuming the global virus situation gradually improves, we expect the bottlenecks will ease in 2022 as production ramps up and shipping congestion starts to clear.”

The sentiment was also voiced by Jerome H. Powell, the Fed chair, as he noted in Senate testimony on Wednesday that factory shutdowns and shipping problems were pushing inflation above the Fed’s goal of 2 percent on average.

Energy stocks were a bright spot for the S&P 500 in September, following oil prices higher. West Texas Intermediate, the U.S. benchmark crude, rose nearly 10 percent for the month.