reporter2
22-09-21, 23:02
U.S. Stocks Rise as Investors Await Fed Decision
Concerns over heavily indebted property developer China Evergrande Group and its effect on markets have also started to ebb
By Caitlin Ostroff
Sept. 22, 2021
https://i.imgur.com/CBSfXKC.png
U.S. stocks bounced higher Wednesday, shaking off the volatility that gripped the market earlier this week, as concerns over property developer China Evergrande Group started to ease and investors awaited an update from the Federal Reserve on its plans to dial back stimulus.
The S&P 500 rose 0.9%. The Dow Jones Industrial Average jumped about 350 points, or 1%. The technology-heavy Nasdaq Composite Index ticked up 0.8%.
Markets have been put on edge this week by trouble in the Chinese property market, especially the precarious situation of its largest builder of homes, Evergrande. The company is a massive issuer of debt both inside China and offshore to international investors. Many fear its collapse could spread financial pain far and wide—a concern that on Monday sent stocks tumbling across the globe.
The Evergrande concerns come at a time when investors are already nervous, due to signs that the U.S. economy’s growth is slowing, the continuing spread of the Delta variant of the coronavirus and the potential that the Fed will dial back its support to financial markets.
Fed officials are due to release a statement at 2 p.m. ET, followed by a press conference. However, expectations that Fed Chairman Jerome Powell could use the occasion to mark the scaling back of the pace of bond purchases this year have waned due to Evergrande fears and concerns over the pace of the U.S. labor market recovery, money managers say.
“With Evergrande, there are concerns over what might happen with the global economy so there’s some expectation that officials will take their foot off the pedal very slowly,” said Susannah Streeter, senior investment and markets analyst at U.K. asset manager and stockbroker Hargreaves Lansdown.
Evergrande’s problems are seen as a high-stakes test of whether the Chinese government will step in to stave off ripple effects that could affect the country’s growth and weigh on the global economic recovery.
An onshore unit of Evergrande said Wednesday it would make an interest payment on time this week, though the debt-ridden conglomerate is still expected to miss a separate payment due on its dollar bonds, which are widely held by international investors.
Wednesday’s loan payment, along with muted changes in China’s Shanghai Composite, which reopened up 0.4% after a holiday, gave some guarded reassurance to investors. Markets in Hong Kong were closed for a holiday Wednesday.
In the U.S. market, Wednesday’s gains were led by the energy sector, extending the group’s recent outperformance. Occidental Petroleum, Diamondback Energy and Marathon Oil each gained more than 4%.
FedEx shares fell 8.4% after the delivery giant spent an additional $450 million due to problems attracting workers in its latest quarter, contributing to an 11% drop in profit. Shares of Adobe declined 3.5%, despite the software company reporting higher profit and record revenue in the latest period.
Throughout Wednesday, signals from the Fed will be closely watched by bond markets. The yield on the 10-year Treasury note rose to 1.324% Wednesday, from 1.323% Tuesday. Yields rise when prices fall.
Futures for Brent crude, the benchmark in international energy markets, rose 1.8% to $75.68 a barrel.
The pan-continental Stoxx Europe 600 added 0.9%. Shares of Entain jumped 6.2% in London trading after the company said it was considering an improved takeover bid from DraftKings, after rejecting an earlier offer from the U.S. digital sports-betting and entertainment company.
Concerns over heavily indebted property developer China Evergrande Group and its effect on markets have also started to ebb
By Caitlin Ostroff
Sept. 22, 2021
https://i.imgur.com/CBSfXKC.png
U.S. stocks bounced higher Wednesday, shaking off the volatility that gripped the market earlier this week, as concerns over property developer China Evergrande Group started to ease and investors awaited an update from the Federal Reserve on its plans to dial back stimulus.
The S&P 500 rose 0.9%. The Dow Jones Industrial Average jumped about 350 points, or 1%. The technology-heavy Nasdaq Composite Index ticked up 0.8%.
Markets have been put on edge this week by trouble in the Chinese property market, especially the precarious situation of its largest builder of homes, Evergrande. The company is a massive issuer of debt both inside China and offshore to international investors. Many fear its collapse could spread financial pain far and wide—a concern that on Monday sent stocks tumbling across the globe.
The Evergrande concerns come at a time when investors are already nervous, due to signs that the U.S. economy’s growth is slowing, the continuing spread of the Delta variant of the coronavirus and the potential that the Fed will dial back its support to financial markets.
Fed officials are due to release a statement at 2 p.m. ET, followed by a press conference. However, expectations that Fed Chairman Jerome Powell could use the occasion to mark the scaling back of the pace of bond purchases this year have waned due to Evergrande fears and concerns over the pace of the U.S. labor market recovery, money managers say.
“With Evergrande, there are concerns over what might happen with the global economy so there’s some expectation that officials will take their foot off the pedal very slowly,” said Susannah Streeter, senior investment and markets analyst at U.K. asset manager and stockbroker Hargreaves Lansdown.
Evergrande’s problems are seen as a high-stakes test of whether the Chinese government will step in to stave off ripple effects that could affect the country’s growth and weigh on the global economic recovery.
An onshore unit of Evergrande said Wednesday it would make an interest payment on time this week, though the debt-ridden conglomerate is still expected to miss a separate payment due on its dollar bonds, which are widely held by international investors.
Wednesday’s loan payment, along with muted changes in China’s Shanghai Composite, which reopened up 0.4% after a holiday, gave some guarded reassurance to investors. Markets in Hong Kong were closed for a holiday Wednesday.
In the U.S. market, Wednesday’s gains were led by the energy sector, extending the group’s recent outperformance. Occidental Petroleum, Diamondback Energy and Marathon Oil each gained more than 4%.
FedEx shares fell 8.4% after the delivery giant spent an additional $450 million due to problems attracting workers in its latest quarter, contributing to an 11% drop in profit. Shares of Adobe declined 3.5%, despite the software company reporting higher profit and record revenue in the latest period.
Throughout Wednesday, signals from the Fed will be closely watched by bond markets. The yield on the 10-year Treasury note rose to 1.324% Wednesday, from 1.323% Tuesday. Yields rise when prices fall.
Futures for Brent crude, the benchmark in international energy markets, rose 1.8% to $75.68 a barrel.
The pan-continental Stoxx Europe 600 added 0.9%. Shares of Entain jumped 6.2% in London trading after the company said it was considering an improved takeover bid from DraftKings, after rejecting an earlier offer from the U.S. digital sports-betting and entertainment company.