It's shaping up to be a rough day on Wall Street. The Dow is on track to fall more than 500 points, or about 1.5%, when the market opens, while the benchmark S&P 500 and the tech-heavy Nasdaq also braced for losses of more than 1%, reports CNBC. Some familiar factors were at play, including COVID cases and investor nervousness about a two-day Fed meeting that begins Tuesday. However, the big driver in Monday's decline appears to be turmoil in the Chinese real estate market, reports the Wall Street Journal. Behemoth developer China Evergrande Corp. is reeling with debt, and the Chinese government is expected to let the company fail. Its stock was down 10%, with ripple effects for global markets.
“Everyone is looking at Evergrande and saying, 'Has the time come for a major default in that area, and then the potential for contagion into the broader property sector?’” Edward Park of Brooks Macdonald tells the Journal. “It’s an imminent risk now rather than being a theoretical risk as it has been for the past few years.” Markets in China and elsewhere in Asia were closed Monday because of a holiday, though Hong Kong's Hang Seng index dropped 3.3% and European markets were down about 2%. The looming US plunge will only intensify what has been a downward slide in September, notes CNBC, as investors shift from riskier to safer assets. (Read more stock market stories.)