U.S. Stocks Gain as China Tech Rally Buoys Market: Markets Wrap

On Aug 24, 2021

(Bloomberg) — U.S. equities gained as investors awaited insights on the Federal Reserve’s policy path amid lingering concerns about the threat of Covid-19 to the global economy.

The S&P 500 and Nasdaq 100 were higher following a rebound in Chinese technology stocks after strong results drew in investors including Cathie Wood. U.S.-listed Chinese companies rose with Alibaba Group Holding Ltd. and JD.com Inc. up about 5% and 10%, respectively. The lift, however, didn’t last for European stocks, with the Stoxx Europe 600 index reversing an earlier advance.

While markets started the week with a strong global rally, equities in the U.S. and Europe remain volatile on concern over the spread of the delta virus variant and tighter monetary policy. Economic data this week painted a mixed picture, with manufacturing purchasing managers’ indexes in Europe and the U.S. showing continued growth, though slowing from last month’s levels.

“How the Fed tapers is the next major variable for this market,” wrote Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. “We do not expect these specifics to be announced on Friday. They will come at the September meeting. But we do expect Powell to hint at an outcome, and given the Fed’s changes to the conference (masks, more social distancing, Powell virtual), if there’s going to be a surprise it’s likely dovish.”

Treasury yields gained and the dollar was flat against a basket of major currencies after plunging the most since May on Monday. WTI crude oil rose above $66 following a jump of more than 5%, and iron ore climbed on expectations additional support from the Chinese government will boost demand for steel.

While Covid-19 cases are falling in many of the original delta-variant hot spots in the U.S., concerns remain that the hyper-infectious strain could make a comeback as schools and colleges reopen. Meanwhile, infections are surging in Southeast Asia, jeopardizing plans to lift lockdowns and threatening to aggravate shortages of semiconductors and other components that have hammered automakers for months.

Here are some events to watch this week:

Bank of Korea policy decision; briefing by Governor Lee Ju-yeol ThursdayFed officials attend the Jackson Hole Economic Policy Symposium from Thursday through SaturdayU.S. GDP, initial jobless claims ThursdayJuly U.S. personal income and spending data Friday. Investors will scrutinize the personal consumption expenditures price index, an inflation measure closely watched by the Fed.

For more market analysis read our MLIV blog.

Some of the main moves in markets:

Stocks

The S&P 500 rose 0.1% as of 9:37 a.m. New York timeThe Nasdaq 100 rose 0.2%The Dow Jones Industrial Average rose 0.1%The Stoxx Europe 600 fell 0.3%The MSCI World index rose 0.4%

Currencies

The Bloomberg Dollar Spot Index was little changedThe euro was little changed at $1.1739The British pound was little changed at $1.3711The Japanese yen was little…