Dow Jones Reverses As China Evergrande Misses Key Interest Payment, Bitcoin Dives

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Investor's Business Daily 24 September, 2021 - 09:02am 10 views

The S&P 500 has to hold this line in the sand or risk a terrifying plunge, says strategist

MSN Money 24 September, 2021 - 01:27pm

Who woke up bond yields? The yield on the 10-year Treasury note is hovering at 1.41% on the heels of a massive move up, and that’s indeed a jump from the 1.33% seen Wednesday.

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Many fingers are pointing in the direction of global central banks — we heard from plenty this week and notably the Federal Reserve. Rising bond yields can often mean trouble for tech stocks, and we may be seeing some of that this morning as Nasdaq-100 futures lead a shift into the red for stock futures.

Equities are coming off a pretty decent two-day rally as we make our way through the dreaded autumn period for stocks, and losses for major indexes stand at 1% plus for September. It probably doesn’t help that we have additional China worries lurking as we wait to hear more on the Evergrande saga.

Our call of the day has a line in the sand for investors to watch. It comes from Matt Maley, chief market strategist at Miller Tabak + Co., who said a big move either way on the S&P 500

In a note to clients, Maley discusses how the S&P 500 broke through its key 50-daily moving average (DMA) support level last week, but then regained it on Thursday. That DMA has been providing “excellent support” for the stock market throughout this year, he notes.

Markets saw similar action in March, when the S&P 500 fell below that 50-DMA for a brief period, then regained and continued to rise over the next few weeks and months, he said.

“This is obviously a bullish development, but we want to make sure that it holds above that 50-DMA into next week. If it does, it will be quite bullish,” wrote Maley.  

But watch out if the index rolls over and falls back below that key level.

Should that happen, Maley said he’ll be “back to watching the 100-DMA like a hawk. Any meaningful break below that 100-DMA and its lows from Monday would scare the hell out of people. Therefore, that kind of move over the next few weeks would be very bearish,” he said.

Here’s another take that says the S&P 500 has some room to run higher:

Read: Since 1983, here’s the tipping point where bonds spell trouble for stocks

Still no word on whether China Evergrande made a $83.5 million interest payment on dollar bonds that was due Thursday. Bondholders reportedly don’t have their money yet. The company has 30 days before it could trigger a default.

Federal Reserve Chair Jerome Powell is expected to give opening remarks at Fed Listens event “Perspectives on the pandemic recovery” at 10 a.m. Eastern. August new home sales are due at the same time.

Advisers to the Centers for Disease Control and Prevention recommended boosters of Pfizer’s COVID-19 vaccine for millions of older or vulnerable Americans.

Shares of Nike are tumbling, after the sneaker maker’s quarterly sales fell short of Wall Street expectations and it said wages and overhead expenses weighed on revenue.

Costco shares are up, as the retailer topped $60 billion in net sales in a single quarter for the first time, hit $5 billion in annual profit, and grew at its fastest pace in more than 20 years.

Apple is pushing back at European Union legislation calling for a universal mobile device charger, saying it would be anti-innovation and increase waste.

Stock futures are lower as the yield on the 10-year Treasury stays above 1.40% after the biggest jump in months on Thursday. European stocks are falling and Asia was mixed with a 1.3% drop for the Hang Seng and a 2% jump for the Nikkei 225. Bitcoin is under pressure after the People’s Bank of China said cryptocurrency transactions were illegal.

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Dow Jones Industrial Average opens positive, S&P opens flat

CNBC Television 24 September, 2021 - 01:27pm

Another rally on Wall Street erases losses for the week

Honolulu Star-Advertiser 23 September, 2021 - 05:12pm

Stocks on Wall Street rallied for the second straight day today and have now reversed the market’s sharp pullback at the start of the week.

The S&P 500 rose 1.2%, with more than 85% of companies in the benchmark index notching gains. The Dow Jones Industrial Average gained 1.5% and the Nasdaq rose 1%.

The rally put the major indexes on pace for weekly gains just four days after a broad sell-off handed the S&P 500 its biggest skid since May and knocked the Dow more than 600 points lower.

The market’s sharp swing from Monday, when the S&P 500 slumped 1.7%, to today, when it closed with 0.4% gain for the week, reflects how quickly investor sentiment can change, and is another example of how in a market that’s near all-time highs, traders tend to see waves of selling as buying opportunities.

Monday’s sell-off was triggered by concerns about the potential for a default by Evergrande, a huge, debt-laden private Chinese real estate developer. Traders also were feeling uneasy about how quickly the Federal Reserve might elect to rein in some of the support measures it’s been giving the markets and economy.

Those worries were allayed by Wednesday, when the Federal Reserve signaled it wouldn’t begin considering such a tapering of support before at least November, and indicated it may start raising its benchmark interest rate sometime next year. Investors also got reassuring news out of China, where Evergrande said it would make a payment due today on a domestic bond.

“The last few days have just been this recognition that all the things that were being talked about, the market has shrugged them off,” said Michael Antonelli, managing director and market strategist at Baird, noting that the S&P 500 is only about 1.5% below its all-time high set earlier this month.

“The market was just ripe for a sell-off,” on Monday, Antonelli said. “We still have not had a 5% pullback from the highs yet this year.”

After its two-day policy meeting concluded Wednesday, the Fed said it will likely begin slowing the pace of its monthly bond purchases “soon” if the economy keeps improving. The Fed and other central banks have been buying bonds throughout the pandemic to help keep long-term interest rates low.

“The reality is that the Fed is going to err on side of not tightening anything on inflation until they absolutely have to,” said Brent Schutte, chief investment strategist, Northwestern Mutual Wealth Management Company. “They are going to stick around as long as they possibly can.”

Still, markets have had a rough September and investors could be in for more choppiness as they work through a mix of concerns, Schutte said. That includes COVID-19 and its lingering impact on the economy, along with a slow recovery for the employment market.

“People got so used to a one-way market,” he said. “It’s going to be more of two-way market and investors need to get used that, but I still think the trend is higher.”

The change in investor sentiment has also put oil prices in the green. Benchmark U.S. crude oil is now up 1.2% for the week.

Bond yields moved solidly higher. The yield on the 10-year Treasury rose to 1.43% from 1.32% late Wednesday, a big move.

All told, the S&P 500 index rose 53.34 points to 4,448.98. The Dow gained 506.50 points to 34,764.82, while the Nasdaq rose 155.40 points to 15,052.24.

Technology companies and banks led the way higher today. Cloud-based software company Salesforce.com was a standout with a 7.2% gain after raising its sales forecast for the year. Citigroup rose 3.9%.

Small-company stocks, which are typically a good measure of investor confidence for economic growth, also jumped over to the winning column. The Russell 2000 rose 40.48 points, or 1.8%, to 2,259.04. It’s up 1% for the week.

Other standouts included Olive Garden owner Darden Restaurants. Its stock jumped 6.1% after delivering strong quarterly results.

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S&P 500 Rallies as Bulls Find Joy in Energy, Financials By Investing.com

Investing.com 23 September, 2021 - 02:55pm

Investing.com – The S&P 500 closed higher Thursday, as the broader market continued to make up ground on losses earlier this week, underpinned by energy and financials.

The S&P 500 rose 1.2%, the Dow Jones Industrial Average gained 1.5%, or 506 points, the Nasdaq climbed 1.0%.

The positive reaction in the markets suggests that investors "are more comfortable with the possibility of the Fed tapering," said Tyler Ellegard, investment analyst at Gradient Investments, in an interview with Investing.com on Thursday. "The Fed has been buying $120 billion of bonds a month, and its balance sheet has exploded … a monthly taper of $15 billion isn't going to have that big of an effect."

The Federal Reserve signaled it would begin to taper its bond-buying program at its next meeting in November -- should the economic progress continue – and expected to conclude tapering in mid-2022.

Cyclicals stocks led the broader move higher as investor concerns eased about a China-led hit to the global economy from the possible collapse of real estate giant Evergrande. In a move that reassured investors that Beijing would seek to limit the impact of Evergrande’s potential downfall, China's central bank pumped another 120 billion yuan of liquidity into the banking system overnight Thursday.

Financials were pushed by bank stocks, underpinned by rising Treasury yields -- following the Fed's signal for a November taper – with the 10-year yield nearing 1.4%.

Zions Bancorporation (NASDAQ:ZION), SVB Financial (NASDAQ:SIVB), and Lincoln National (NYSE:LNC) led financials higher.

Higher interest rates boost the return on interest that banks earn from their loan products, or net interest margin – the difference between the interest income generated by banks and the amount of interest paid out to depositors.

Reopening stocks – those that benefit from easing pandemic restrictions – were in rally mode, with airlines and cruise companies in the ascendency.

Cruise company Carnival (NYSE:CCL) confirmed that it was on track to resume over 50% of its fleet capacity by October. Its shares rallied more than 4%.

In megacap tech, Apple (NASDAQ:AAPL) added to recent gains as investors talked up the prospect of improved iPhone sales.  

"Based on gauging pre-order activity across the globe to its predecessor iPhone 12 we believe iPhone 13 pre-orders are currently running north of 20% ahead of Apple's launch last year, an impressive start for this latest upgrade cycle out of Cupertino," Wedbush said in a note.

Darden Restaurants (NYSE:DRI), meanwhile, rose 6% after reporting earnings and revenue that topped expectations as same-store sales jumped 47.5% year-on-year.

Salesforce.com (NYSE:CRM) lifted its full-year revenue guidance after reporting quarterly results that exceeded market forecasts. Its shares were up 7%.

On the economic front, initial weekly jobless claims unexpectedly increased by 16,000, missing expectations for a 15,000 decline. Economist suggested the weakness was related to disruptions from Hurricane Ida. 

"Claims were boosted by a combination of relatively unfriendly seasonals and, we think, claims triggered by Hurricane Ida but delayed until after the chaos subsided," Pantheon Macroeconomics said in a note.

The strong day of gains on Wall Street followed a slump earlier this week, which was a buying opportunity as markets are likely to grind higher supported by a healthy amount of investor dollars on the side lines.

"There is about $3-to $4-trillion on the sidelines in money market accounts, so any type of correction that we get -- whether it's 3%, 4%, or 5% -- that cash will be put back to work," Ellegard said. "I think that is what's holding up the market."

The energy sector gained substantially in the second quarter of 2021. Although the industry was dealt a setback by Hurricane Ida earlier this month, it is expected to keep gaining...

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If Antonio Brown can’t play Sunday, Bucs can brandish receiver depth

CNBC 23 September, 2021 - 02:35pm

Fortunately for them, its initial blow landed on their deepest position.

Wide receiver Antonio Brown’s stint on the reserve/COVID-19 list likely means backups Scotty Miller and Tyler Johnson will log their first extensive action of 2021 Sunday against the Rams in Los Angeles. Miller, an unlikely star of last season’s NFC title game, still is seeking his first reception of 2021. Johnson has one catch in two games.

“Any time you play with the team that we have ... and you’re the fourth, fifth and sixth guy in that (receiving) room, you’re just really waiting for opportunities,” offensive coordinator Byron Leftwich said Thursday.

“(Miller) and Tyler, really that whole room is just waiting to get the opportunity to make plays. In the game of football, between injuries and COVID and everything now, I think guys will have opportunities just because it’s football.”

Brown was placed on the reserve/COVID-19 list Wednesday and would need two negative tests 24 hours apart to be eligible to play Sunday, leaving his status for the game very much in doubt.

To this point, the Bucs passing game essentially has run through Brown, fellow receivers Mike Evans and Chris Godwin and tight end Rob Gronkowski. The four have accounted for all nine of the team’s touchdown receptions and 39 of its 56 catches.

“I think everyone kind of knew this situation,” quarterback Tom Brady said.

“It’s just the way things are now with stadiums full and families traveling. We’re definitely at more risk this year. I don’t know what we can do about it, but in our situation we’ll just deal with it and try to get some other guys prepared, and if (Brown) can’t go, he can’t go.”

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