The stock market declined sharply on Monday (September 20) as investors were concerned about a potential financial crisis in the Chinese property market. The Dow Jones Industrial Average closed the day at 33,970, down by 614 points. The Nasdaq was 330 points in the red, closing at 14,713, while the S&P 500 finished the day down by 75 points, closing at 4,357.
Chinese real estate developer Evergrande is struggling to manage over $300 billion in debt and may not be able to make its debt payments later this week. If the company defaults on those payments, it could send ripples throughout the global financial markets as many banks could be left exposed after lending the company large sums of money.
Some analysts say Evergrande missing its debt payments could be a "Lehman Brothers moment," referring to the collapse of the investment bank, which was the catalyst for the 2008 financial crisis.
Others aren't overly concerned about the issue and believe the Chinese government will provide assistance if Evergrande defaults.
"We think the odds do favor the Chinese communist government will get involved should there be a default," Ryan Detrick, chief market strategist for LPL Financial, said, according to CNN. "They are holding out as of now, but the fallout could be too great for them to avoid intervening."
Investors are also keeping their eyes on the Federal Reserve's upcoming two-day policy meeting, where officials will discuss when they plan to begin curbing the Fed's $120 billion per month of asset purchases.