- The bulls are pushing for a bullish close ahead of the Fed.
- Evergrande contagion risks abate, risk-on sentiment improving.
At 4,362, during the time of writing, the S&P 500 is trading in the green and is headed for a bullish close for Tuesday. World stock markets have edged back after heavy selling at the start of the week which sent Wall Street in its biggest decline since May.
US stocks advanced in choppy midday trading on Tuesday after most Asian markets closed higher as beleaguered Chinese real-estate firm Evergrande edged closer to its debt payment deadline on Thursday.
At the time of writing, the Dow Jones Industrial Average is flat with S&P 500 up by 0.08% and Nasdaq higher by 0.26%. All three indexes traded lower earlier in the session. Ironically, real estate was the biggest gainer at the start of the day, with all but one sector in the green as investors grew more confident that contagion from the distress of Evergrande would be limited.
Evergrande risks abate
“From our perspective, we … do not see any potential fundamental long-term effects on our portfolio companies,” said one London-based hedge fund professional, according to Reuters. However, “there could likely be a lot of volatility around this one in the short term.”
Meanwhile, S&P Global Ratings said in a report on Monday it does not expect Beijing to provide any direct support to Evergrande. "We believe Beijing would only be compelled to step in if there is a far-reaching contagion causing multiple major developers to fail and posing systemic risks to the economy," the rating agency said. "Evergrande failing alone would unlikely result in such a scenario," S&P said.
On Tuesday, MSCI's gauge of stocks across the globe gained 0.35%, following Monday's biggest percentage drop in two months. European indexes also rose solidly. The Cboe Volatility Index retreated after hitting a four-month high a day earlier, last down 2.25 points to 23.46.
The pan-European STOXX 600 index .STOXX rose 1%, with Germany's DAX DB1 rising 1.4%. Canada's main stock index. GSPTSE gained as Prime Minister Justin Trudeau's limited victory in the federal election raised hopes that his government would keep the stimulus taps open.
Top midday gainers
Helbiz (HLBZ) has agreed with Amazon's (AMZN) Italy unit to broadcast the entire Italian Serie B football championship on all devices and TVs equipped with Amazon Prime Video Channels throughout Italy.
Shares of Helbiz added 144% by Tuesday afternoon as the volume of trading catapulted to 41.2 million from the stock's daily average of 1.4 million.
Inotiv (NOTV) said it agreed to buy lab rodents breeder Envigo for $200 million in cash plus 9.4 million shares of its common stock.
Inotiv has rallied 26%, with intraday daily trading volume more than tripling to over 288,000.
Viridian Therapeutics (VRDN) has put on a significant 19% following an offering by the company of common and preferred stock for gross proceeds of $85 million.
Top midday decliners
BC Bearings (ROLL) has started concurrent public offerings of 3 million shares of common stock and $400 million in aggregate liquidation preference of Series A mandatory convertible preferred stock. This sent its share price by 13% by Tuesday afternoon in strong trade volumes of 10x.
Vinco Ventures (BBIG) shares have dropped 13%, with the volume of trading at 41.6 million lagging the stock's daily average of 44.5 million.
Activision Blizzard (ATVI) shares are down 3.7%, among the worst performers on both S&P 500 and Nasdaq.
The Fed is now eyed
Central bank meetings will soon to take center stage for markets, with a Federal Reserve meeting due to conclude on Wednesday as investors look for clude for when the Fed might ease its bond-buying program.
''No change in policy is expected but we expect a hawkish hold as the official statement and the minutes should continue to lay the groundwork for tapering this year,'' the analysts a Brown Brothers Harriman said, in a note, concluding with the following:
''The Fed is likely to wait until the November 2-3 meeting to make an official tapering announcement, with a likely start in December. August building permits (-1.8% m/m expected) and housing starts (1.0% m/m expected) will be reported today, along with Q2 current account data (-$191 bln expected).''
S&P 500 technical analysis
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Traders are testing the 15-min 50-EMA that meets a critical level of resistance ahead of the close. 4,380 is in focus.
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