Stocks Sink As Selling Hits AMC Entertainment, Showbiz Shares

·2 min read

Stocks retreated sharply Monday in the worst opening in weeks on jitters prompted by a potential crisis in the Chinese real estate sector, fear over Fed policy changes and negotiations over the U.S. debt ceiling in Washington, D.C.

There’s also been some recent data raising fears of slower growth in the U.S. and global economy. Stocks fell across the board and the fears created pressure on riskier assets, with AMC Entertainment particularly hard hit — off 5% at the open — and exhibition stocks following. The share price of the nation’s largest theater chain has been inflated by Reddit-fueled buying that’s taken the price well beyond what Wall Street thinks the stock is worth. Cinemark and Imax were both down about 3%.

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Tech stocks like Spotify and Fubo (both down 3.5%) as well as Roku (down 1.8%) and Snap (off 2.6%) were also down. But just about everything is in the red.

Showing the ripple effects of an interconnected world, investors are focused on a potential default by giant Chinese real estate developer China Evergrande Group, which holds the biggest debt burden of any publicly traded company in that sector in the world. A collapse would hit, shareholders and bondholders and could spark turmoil in global markets.

Also, the Federal Reserve is holding its open policy meeting this week and investors are attuned to signs that rising inflation may push it to tighten the expansive monetary policy U.S. markets have become accustomed to during Covid.

And the U.S. House of Representative will vote this week on the debt ceiling and a stopgap spending measure to keep the government operating past the end of its September fiscal year.

The Dow Jones Industrial Average was down nearly 400 points, off its lows earnings this morning. The S&P 500 was down more than 1.7% The market has been wobbly of late with stocks posting the biggest two-week decline since February over the past few weeks.

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