Stocks End Flat In Volatile Session, All Eyes on Fed
4:12 pm Tuesday, September 21st, 2021
U.S. stocks ended near flat on Tuesday after a broad sell-off the day before, with worries over troubles at developer China Evergrande and uncertainty ahead of Wednesday’s Federal Reserve policy news keeping a lid on the market.
The positive bias is being attributed to buy-the-dip efforts on the view that every dip has been a good long-term buying opportunity. Presently, ten of the 11 S&P 500 sectors are trading higher, led by the real estate (+0.7%), utilities (+0.6%), and energy (+0.6%) sectors. The industrials sector (-0.3%) is the lone holdout.
Further supporting the cause are better-than-expected housing starts and building permits data for August, upwardly revised guidance from Uber (UBER), encouraging booster efficacy data from Johnson & Johnson (JNJ), and better-than-expected earnings results from AutoZone (AZO).
Still, there’s some skepticism in the rebound bid given 1) the S&P 500 coughed up an early 0.9% gain, 2) there’s still uncertainty surrounding Evergrande, infrastructure, and the debt ceiling, and 3) there’s a potential for the market to react negatively to tomorrow’s FOMC policy announcement.
On Evergrande, it’s worth noting that the company’s chairman was optimistic that the company will survive its debt issues. In Washington, the House confirmed it will vote on a bill to fund the government/suspend the debt ceiling today and will separately vote on the $1 trillion bipartisan infrastructure bill on Monday.
In M&A news, ConocoPhillips (COP) agreed to acquire Royal Dutch Shell’s Permian Business for $9.5 billion in cash. U.S. Bancorp (USB) agreed to acquire MUFG Union Bank for $8 billion in cash and stock. DraftKings (DKNG) offered to acquire Entain (GMVHY) for $20 billion in cash and stock.
The Treasury market has been more cautious than the stock market. The 10-yr yield is trading higher by just one basis point at 1.32%. The U.S. Dollar Index is down 0.1% to 93.20.
