A Chinese Company Called Evergrande Is Hitting Stocks Badly. Here’s What To Know.

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A sign for the China Evergrande Centre building, the Hong Kong home for China Evergrande Group, is shown in the Asian city on Sept. 15. Fears of a debt default at the property developer has sparked a global stock market sell-off on Monday.

Peter Parks/AFP via Getty Images

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Peter Parks/AFP via Getty Images

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The China Evergrande Group headquarters is seen in Shenzhen, southeastern China on Sept. 14. Fears about a default by the Chinese property giant sparked a global stock market sell-off.

Noel Celis/AFP via Getty Images

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Noel Celis/AFP via Getty Images

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How A Summer Of ‘Yes’ Is Ending In A Cloud Of Uncertainty For The Economy

The uncertainty raises the stakes for the Federal Reserve, which meets on Tuesday and Wednesday.

Fed Chairman Jerome Powell has said the central bank plans to start removing this year some of the massive market support it’s currently providing to markets, a process known as the bond taper. That support has come in the form of purchases of $120 billions in government bonds and mortgage-backed securities each month.

And there are also worries about a debt default by the U.S. government.

Treasury Secretary Janet Yellen has said the U.S. could run out of money to pay its bills in October if Congress does not raise the debt ceiling, something that is far from certain at a time when Democrats have only a razor-thin majority.

In an op-ed in The Wall Street Journal on Monday, Yellen warned a debt default would lead to a «widespread economic catastrophe.

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Treasury Secretary Janet Yellen testifies before a Senate Appropriations Subcommittee on June 23, on Capitol Hill in Washington, D.C. Yellen on Monday warned of a potential economic «catastrophe if Congress does not raise the debt ceiling.

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Greg Nash/AP

Treasury Secretary Janet Yellen testifies before a Senate Appropriations Subcommittee on June 23, on Capitol Hill in Washington, D.C. Yellen on Monday warned of a potential economic «catastrophe if Congress does not raise the debt ceiling.

Greg Nash/AP

So what happens next?

Halfway through September, all three major indexes have declined.

Trading on Wall Street is likely to remain volatile, as investors proceed with caution. They’ll pay close attention to the Fed’s plans, and they’ll watch what is happening in China. And economic data will continue to be important.

Perhaps the most important factor will be what happens with the Delta variant, which has led many companies to push back return-to-work dates.

Wall Street forecasters are already paring back their expectations for gains this year, and many are predicting a short-term pullback.

That said, markets have suffered bouts of uncertainty since the pandemic began, and they’ve eventually regained their footing to continue a march toward new record highs.