The stock market rally, under pressure since Sept. 17, sold off hard Monday as fears that China’s Evergrande Group would default rippled through financial markets worldwide. But on Wednesday, the Nasdaq regained its 50-day as Evergrande said it would make a debt interest payment, while the Fed pushed back a bond taper decision until November. The S&P 500 also reclaimed its 50-day on Thursday as another flurry of leading stocks flashed buy signals, sending the stock market back into a confirmed uptrend. But Evergrande debt fears remain. Salesforce.com (CRM) jumped on strong guidance. Adobe (ADBE), Nike (NKE) and FedEx (FDX) were earnings losers, while Facebook (FB) sees headwinds.
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Stock Market Rally Shrugs Off Pressure
The stock market rally started the week with heavy losses, but then rebounded powerfully on Wednesday and Thursday, with the S&P 500, Nasdaq and Russell 2000 all reclaiming their 50-day lines. The major indexes were slightly to modestly higher for the week as of Thursday. Fears of a huge default by China Evergrande eased, somewhat, while the Fed walked the line between dovish and hawkish moves. After starting “under pressure” and nearly moving into a correction, the market rally was back to a confirmed uptrend by Thursday’s close. Leading stocks, which held up relatively well in the pullback, roared higher as the broader market improved. Treasury yields jumped on the Fed, fueling financials. Crude oil prices lifted energy stocks. But a China ban on crypto transactions slammed Bitcoin and other alt-coins.
But stocks retreated Friday morning.
Fed Signals Bond Taper In November
The Federal Reserve decided not to approved a bond taper at its latest policy meeting, but Fed chief Jerome Powell signaled that it would likely come in November, with asset purchases falling to zero by mid-2022. That could set the stage for a rate hike late next year. Half of the 18 policymakers see a 2022 rate hike, vs. 7 at the prior meeting. Treasury yields rose on the Fed decision, but stocks also rallied.
Adobe Delivers Beat-And-Raise Report
The digital media and marketing software giant reported a 21% EPS gain in its fiscal Q3 as revenue rose 22% to $3.94 billion. Adobe (ADBE) also guided higher. But Adobe stock fell as investors focused on disappointing annual recurring revenue in its core Digital Media business.
Vaccine News
Covid vaccine stocks rose last week on a barrage of regulatory decisions and test results. The Food and Drug Administration, following an advisory panel’s recommendation authorized a booster dose of the Pfizer and BioNTech shot for people age 65 and older, and those at risk of progressing to severe Covid due to preexisting conditions or occupational/institutional exposure. The FDA could also soon authorize shots for children ages 5-11. Pfizer and BioNTech said a smaller dose for children still produced a comparable level of antibodies to what has been seen in people age 16-25. The U.S. will buy 500 million more…
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