Dow plummets 500 points as Evergrande contagion fears ripple across markets

• US stocks plunged on Monday amid ongoing fears of contagion from Evergrande's rising risk of default on its more than $300 billion in liabilities.
• The heightened market volatility comes amid a historically weak September for stocks.
• Investors are also grappling with the rising uncertainty of the US debt ceiling, which needs to be raised by a divided Congress by October.
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US stocks cratered on Monday amid ongoing fears of contagion from the Evergrande debt crisis in China and heightened uncertainty about the US raising its debt ceiling before an October deadline.

Evergrande is the second largest property developer in China and has more than $300 billion in liabilities as it fueled its growth over the past decade. But an upcoming debt crunch of more than $7 billion due in 2022 for the highly levered company, along with interest payments due this Thursday has many speculating that the company can't meet its debts. There are no signs yet that the Chinese government will step-in and aid the company.

Meanwhile, a divided congress has been unable to raise the debt ceiling and Republicans and Democrats are showing little willingness for a compromise. Congress has to raise the debt ceiling by October, or it risks defaulting on its own obligations.

Here's where US indexes stood shortly after the 9:30 a.m. ET open on Monday:

• S&P 500: 4,373.01, down 1.41%
• Dow Jones Industrial Average: 34,079.76, down 1.46% (505.12 points)
• Nasdaq Composite: 14,795.91, down 1.66%

The risk-off sentiment in stocks could lead to a prolonged period of heightened volatility as the S&P 500 tests crucial support levels like its 50-day moving average, according to technical analyst Katie Stockton of Fairlead Strategies.

Cryptocurrencies plunged on Monday, with both bitcoin and ether falling more than 5% below key support levels. The sell-off in crypto highlights the heightened correlation between it and stocks during down-periods for the market.

El Salvador took advantage of the sell-off in crypto and said it bought an additional 150 bitcoins on Monday, bringing its total holdings to more than $30 million.

Despite the stock market sell-off spurred by the Evergrande debt crunch, three top analysts said this isn't China's "Lehman Brothers" moment and the Chinese government can step in to contain the mess and insulate its economy.

Oil prices fell. West Texas Intermediate crude dropped as much as 1.53%, to $70.72 per barrel. Brent crude, oil's international benchmark, fell 1.11%, to $74.50 per barrel.

Gold jumped as much as 0.38%, to $1,758.00 per ounce.