U.S. stock futures are sharply higher following the worst day of declines since May of this year.
Dow Jones futures are up nearly 350 points, or 1%. S&P 500 futures gained 0.9% and NASDAQ 100 futures rose 0.8% in early trading Tuesday (September 21).
Asian markets were stabile overnight, helping sentiment in the U.S. after fears grew Monday that the liquidity crisis at Chinese developer Evergrande would lead to a global contagion. Hong Kong’s Hang Seng Index rose 0.5% after dropping more than 3% a day earlier.
On Monday (September 20), the S&P 500 slid 1.7% for its worst day since May 12. The Dow Jones Industrial Average plummeted 614 points, or 1.8%, for its biggest one-day drop since July 19. The NASDAQ Composite dropped 2.2%.
Stocks linked to global growth that led Monday’s selloff were bouncing in premarket trading Tuesday. Nucor steel was up 1.8% in premarket trading. Copper miner Freeport-McMoRan added 3%. Chipmakers, banks and energy stocks were also bouncing higher in premarket trading.
The U.S. Federal Reserve begins a two-day policy meeting and investors are looking for more information from Chairman Jerome Powell about the central bank’s plans to taper its bond buying, specifically when that will happen. Powell said last month that he sees the central bank slowing its $120 billion U.S. in monthly bond purchases at some point this year.
The Fed releases its quarterly economic forecasts, the so-called dot plot, along with a statement on interest rates on Wednesday (September 22). Powell will have a press conference after the announcements.
At the same time, struggling real estate developer China Evergrande Group teeters on the brink of default and is due to pay interest worth $83 million later this week, according to S&P Global Ratings. Analysts largely believe Evergrande will miss the interest payment and S&P sees a default as "likely."
Investors are also concerned about the Delta variant of COVID-19 and the U.S. deadline to raise the debt ceiling and possible tax increases. Congress returned to Washington from recess rushing to pass funding bills to avoid a government shutdown.
