- US equities waver amid pre-Fed cautious, fears ahead of Evergrande payment deadline.
- Treasury yields benefit from hopes over stimulus, debt limit, DXY eases.
- Walt Disney shares dropped on delayed program production, ConocoPhillips cheer chatters over acquiring Permian Basin deal.
US shares closed mixed on Tuesday as fears over China’s Evergrande default abate and market players brace for the Federal Reserve begins two-day Federal Open Market Committee (FOMC) policy meeting. Even so, upbeat housing data and hopes of debt limit extension kept traders hopeful.
That said, the Dow Jones Industrial Average (DJI) dropped 0.15% to 33,919 whereas S&P 500 marked 0.08% daily loss while closing the day’s trading around 4,354. On the contrary, Nasdaq ends the day with 0.22% gains, around 14,746.
The US Dollar Index (DXY) also portrayed the sluggish mood while keeping the previous day’s pullback from the monthly top but closing with minimal losses. Alternatively, the US 10-year Treasury yields rose 1.9 basis points (bps) to 1.328% by the end of Tuesday’s North American session.
Investors expect China will save its biggest real-estate player, either directly or indirectly, from being like a Lehman saga. Evergrande Chairman and the International Monetary Fund’s (IMF) Chief Economist Gita Gopinath also sound optimistic in his latest speech and supported the brighter concerns.
Another risk-on factor was hopes of stimulus, as hinted by House Speaker Nancy Pelosi, as well as the US Democratic Party’s push to suspend the debt ceiling. Recently, the US House votes 217-207 to favor temporary government funding and debt limit increase debate.
To be stock-specific, Walt Disney became one of the biggest negatives for S&P 500, down over 4.0%, after Chief Executive Officer Bob Chapek said the resurgence of the Delta variant of the coronavirus was delaying production of some of its titles, per Reuters. On the same line was Activision Blizzard which struggles with regulatory aspects of workplace complaints.
On the positive side, talks that ConocoPhillips prepares to acquire Permian Basin assets of Royal Dutch Shell helped the COP quote to gain around 4.0%.
Moving on, investors will pay close attention to the Fed decision amid chatters over tapering, which if happened may amplify the bearish concerns for equities.
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