Wall Street Ends Sharply Lower In Broad Sell-off

Major US stock indices have finished with heavy losses, as fears over the potential collapse of China's Evergrande and a possible credit default in the United States sparked a broad selloff.

Shares of Evergrande in Hong Kong had plunged on Monday by as much as 19 percent to their lowest in over 11 years. Regulators have warned that its US$305 billion of liabilities could spark broader risks to China's financial system if its debts are not stabilised.

“It started with the problems with the China Evergrande real estate company and I think it just has become a contagion,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

The situation was made worse by the ongoing impasse in the United States Congress over raising the country's debt limit. The Republican opposition refuses to increase the cap despite warnings from the White House of an economic catastrophe in the event of an unheard-of US debt default.

"We are really playing with fire, at the risk of the government having to shut down. It's not catastrophic, but it doesn't really give confidence in the short term," said Gregori Volokhine of Meeschaert Capital Markets.

The two-day Federal Reserve meeting beginning on Tuesday is another source of uncertainty, as the central bank could announce changes to its stimulus policies.

The tech-rich Nasdaq fell to its lowest level in about a month, and Microsoft, Alphabet, Amazon.com, Apple, Facebook and Tesla were among the biggest drags on the index.

All eleven major S&P 500 sectors were lower, with economically sensitive groups like energy down the most.

The Dow Jones Industrial Average fell 1.78 percent, to 33,970, the S&P 500 lost 1.7 percent, to 4,358 and the Nasdaq Composite dropped over two percent to 14,714. (AFP/Reuters)