US STOCKS-Wall Street to jump out of rout led by Evergrande
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* The S&P 500 exceeds the 50-day moving average
* Fed uncertainty limits some gains
* Futures up: Dow 0.64%, S&P 0.61%, Nasdaq 0.62% (Commentary, chart and price updates)
By Ambar Warrick
Sept. 21 (Reuters) – U.S. stock indexes were set for a strong open on Tuesday as investors tried to allay contagion fears of a potential Evergrande collapse in China, with emphasis also on a meeting of the Federal Reserve for further guidance on monetary policy.
All three indexes posted large losses on Monday as investors worried about a possible default by China’s No.2 property developer Evergrande that could spill over into the entire economy and possibly spill over into the bank. pass on to foreign markets.
Concerns over Evergrande have been a boiling point for markets already struggling with coronavirus issues and sluggish economic growth.
Investors tend to be nervous with stocks trading at relatively high valuations. The S&P 500 has now fallen for nine of 11 sessions since reaching an all-time high in early September.
“As the market has walked higher, there is always a worry about ‘when is the music going to stop? “… There are more than several issues that created a confluence, maybe it was the game that lit the fuse (Monday),” said Andre Bakhos, managing director of New Vines Capital LLC in Bernardsville, New Jersey. .
Attention will be focused on the outcome of the Fed’s policy meeting on Wednesday, where the central bank is expected to lay the groundwork to ease its stimulus, although consensus is for a real announcement to be delayed until November meetings. or December.
Taper fears have already rocked markets so far in September, and with weak seasonal trends, put the S&P 500 on track to end a seven-month winning streak.
“It depends on how (the cut) is presented… at the end of the day we’re going to put in place measures to alleviate inflation concerns. The market is already nervous, and if they say they will decrease, this will create some anxiety in the short term, ”Bakhos added.
As of 8:29 a.m. ET, S&P 500 e-minis were up 26.5 points, or 0.61%, and Nasdaq 100 e-minis were up 93 points, or 0.62%.
The S&P 500 Index fell considerably below its 50-day moving average on Monday, its first major breach in more than six months. The average has served as a floor of sorts for the index this year.
Analysts say the index’s 200-day moving average is now in sight.
Among other drivers, Freeport-McMoRan Inc led mining stocks higher with a jump of 1.6%, after large losses in commodity-linked stocks a day earlier as copper prices reached a one-month low.
Interest rate sensitive bank stocks also rebounded, following higher Treasury yields.
Heavy tech stocks including Apple Inc, Tesla Inc, Facebook Inc and Alphabet Inc rose 0.8% to 1.0%.
The CBOE volatility index, known as the Wall Street fear gauge, fell from a four-month high reached on Monday.
(Reporting by Sagarika Jaisinghani and Ambar Warrick in Bengaluru; Editing by Arun Koyyur, Saumyadeb Chakrabarty and Shounak Dasgupta)