Business & Investment

Stocks rebound because supply is not ready to stop stimulating

US stocks rebounded on Wednesday after the Federal Reserve Board showed no imminent rollback of the monetary stimulus that supported the economy through a pandemic.

The Dow Jones Industrial Average rose 338.48 points (1.%) to 34,258.37.

The S & P 500 rose 41.45 points (1%) to 4,395.64.

The Nasdaq Composite Index rose 150.45 points (1%) to 14,896.85.

The main average recorded losses in September, a historically volatile month for stocks. The S & P 500 has fallen 2.8% so far in September, including a 1.7% drop on Monday, the worst day since May.

The Dow fell about 3% in September.

Commodity stocks led a comeback on Wednesday as concerns about the spillover effect from Evergrande eased. Devon Energy surged by more than 7%, while APA, Diamondback Energy and Marathon Oil all surged by about 5%. Wynn Resorts exposed by China bounced more than 2%.

FedEx shares fell 8% after higher labor costs reduced shippers’ profits in the previous quarter. FedEx has also lowered its full-year forecast.

At the heart of investor concern is the embarrassed Chinese real estate developer Evergrande. This faces the possibility of default if US dollar-denominated bonds are unable to repay millions of dollars in debt this week.

Evergrande’s share in Hong Kong has fallen by nearly 90% since July 2020 as China cracks down on real estate speculation. Investors are concerned that China’s excessive slowdown in the real estate market and the failure of Evergrande will slow global economic growth.

Helping emotions overnight was a statement from Evergrande that the real estate group would pay interest on bonds traded on the RMB-denominated mainland on time.

Shares fell from highs after Fed Chair Powell said further progress testing of the central bank was filled with its inflation mandate.
“Many” members also believe that their employment obligations have been tested. This shows that the Fed is almost ready to start eliminating stimuli.

The Fed is still split at the time of the first rate hike. Wednesday’s so-called Dot Plot forecast showed that nine of the 18 FOMC members expect a rate hike in 2022. This is up from the Fed’s forecast of seven in June.

The price of 10-year government bonds was high, with yields declining from 1.32% on Tuesday to 1.31%. Treasury prices and yields move in the opposite direction.

Oil prices have been added from $ 1.49 to $ 71.98 per barrel.

Gold prices fell $ 10.90 per ounce to $ 1,767.20.

Stocks rebound because supply is not ready to stop stimulating

https://www.baystreet.ca/articles/market_updates_us.aspx?articleid=70523 Stocks rebound because supply is not ready to stop stimulating

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