U.S. benchmarks closed Monday’s trading session at their lowest levels since August’s large-scale declines as concerns over global economic slowdown persist and domestic economic data kept investors unsettled. The Standard & Poor’s 500 Index fell 49.57 points, or 2.6%, to trade at 1,881.77 as the index fell below the 1,900 level for the first time since late August when China opted to devalue the yuan and set off a chain reaction of volatile trading. The Dow Jones Industrial Average dropped 312.78 points, or 1.92%, to trade at 16,991.89. The NASDAQ Composite declined 142.53 points, or 3.04%, to trade at 4,543.97 as a large biotech selloff weighed down heavily on the index.
The iShares NASDAQ Biotechnology ETF (NASDAQ:IBB), a measure if the biotech sector’s performance, fell 6.3% to post its worst one-session decline on over four years. Adding to the grim atmosphere, the NASDAQ Composite joined the other three major market indexes in forming what technical analysts refer to as a “death cross” chart pattern. Such a pattern emerges when the 50-day moving average falls below the 200-day moving average, and historically acts as a prelude to longer short-term declines in the broader market. Despite not entirely living up to its morbid name, the pattern suggests the market is moving in a bearish direction.
European shares closed lower on Monday after a sharp decline as concerns over carmaker Volkswagen (OTC:VLKPY) (XETRA:VOWG) and mining giant Glencore (OTC:GLNCY) (LONDON:GLEN) mounted. The pan-European STOXX 600 closed 2.2% lower as it extended its declines after U.S. stocks moved lower during the day. The German DAX ended 2.1% lower as concerns over Volkswagen’s emissions scandal continued to weigh down on the carmaker. Volkswagen ended around 7.5% lower after the company announced that it would need to recall 2.1 Audi-branded cars. The UK’s FTSE ended 2.5%, led by Glencore. The French CAC closed 2.8% lower. London-listed Glencore led the declines, assuming the dubious part of the worst performing European stock on Monday. Glencore shares plummeted 29% in its biggest one-day move recorded. The UK miners declined as concerns over soft commodity prices mounted after the release of a report that suggests that large mining operations could not be sustained.
This week’s upcoming economic data releases include today’s U.S. consumer confidence index, as well as inflation data for the Eurozone. U.S. and Eurozone unemployment data will be released on Wednesday, followed by Chinese and Japanese manufacturing data on Thursday. Japanese unemployment and U.S. nonfarm payrolls will be released on Friday.