BackWall St rebounds from Evergrande rout in cautious trade; Dow rises over 250 pts
The CBOE volatility index, also known as Wall Street's fear gauge, traded just below four-month highs hit in the prior session
PremiumU.S. stock indexes rose on Tuesday as investors weighed the risk of contagion from debt-saddled Chinese developer Evergrande, although gains were capped by concerns the Federal Reserve could signal it was ready to start tapering monetary stimulus.
Uncertainty in markets remained high, with defensive sectors including healthcare and consumer staples leading early gains. Both sectors added around 1%.
The CBOE volatility index, also known as Wall Street's fear gauge, traded just below four-month highs hit in the prior session.
Wall Street's three main indexes tumbled on Monday as investors fretted over a possible default by China's no.2 property developer Evergrande, which could ripple across the broader economy and possibly spill over to foreign markets.
Concerns over Evergrande acted as a boiling point for markets trading near record highs, amid coronavirus concerns and sluggish economic growth.
"As the market has marched higher, there's always a concern over 'when is the music going to stop?' ... there are more than several issues that created a confluence, that may have been the match that lit the fuse (on Monday)," said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.
Investor focus on Wednesday will be on the results of the Fed's policy meeting, where the central bank is expected to lay the groundwork to ease its stimulus, although the consensus is for an actual announcement to be delayed until the November or December meetings.
Taper fears have already roiled markets so far in September, and along with seasonally weak trends, have set the S&P 500 on course to snap a seven-month winning streak.
"It comes down to how (tapering) is presented ... ultimately we're going to get some measures in place to temper inflation concerns. The market is already nervous, and if they say they're going to taper, it's going to create some near-term angst," Bakhos added.
At 09:45 am ET the Dow Jones Industrial Average rose 272.83 points, or 0.80%, to 34,243.30, the S&P 500 gained 30.11 points, or 0.69%, to 4,387.80, and the Nasdaq Composite gained 109.62 points, or 0.75 %, to 14,823.52.
The S&P 500 index traded substantially below its 50-day moving average, 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 a breach of the index's 200-day moving average is now in sight.
Among other movers, energy stocks rose 0.7% as oil prices gained on signs of tight U.S. supply due to the aftermath of Hurricane Ida.
Heavyweight technology stocks, including Apple Inc, Tesla Inc, Facebook Inc and Alphabet Inc , rose between 0.5% and 1.0%.
Advancing issues outnumbered decliners for a 3.7-to-1 ratio on the NYSE and a 3.4-to-1 ratio on the Nasdaq.
The S&P 500 posted no new 52-week high and no new low, while the Nasdaq recorded 19 new highs and 24 new lows.
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This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
