Dow Poised to Rise Near 200 Points, Fed Decision Looms—and What Else Is Happening in the Stock Market Today

Overseas, the Shanghai Composite rose 0.4% and the pan-European Stoxx 600 was 0.7% higher.

The two major forces commanding investor attention are the end of the monthly meeting of the U.S. Federal Reserve’s monetary policy-making body and the financial woes—and looming failure—of China Evergrande Group.

The Federal Open Market Committee’s two-day meeting ends Wednesday, and Fed Chair Jerome Powell will make a subsequent statement.

The Fed is considering when to slow, or taper, its Covid-19 pandemic-era program of monthly asset purchases, which add liquidity to markets. Any indication that a taper will come sooner rather than later has the potential to wobble stocks.

Officials at the central bank will also update their projections of future interest rates—the “dot plot”—and inflation.

Jim Reid, a strategist at Deutsche Bank , said the group’s economists “see Powell maintaining optionality about the exact timing of that announcement, but they think that the message will effectively be that the bar to pushing the announcement beyond November is relatively high in the absence of any material downside surprises.”

Meanwhile, fears centered on China Evergrande Group, the world’s most indebted property developer whose looming failure threatens to spill beyond China, remained, but they appeared to stabilize. Chinese markets returning from a two-day break didn’t crash, as some had expected.

“One key event is China’s troubled property developer Evergrande striking a deal over a bond repayment, thereby bringing a sense of relief to markets we might not see the business collapse—something that could cause ripples in multiple markets,” said Russ Mould, an analyst at broker AJ Bell .
 

Read more: China Evergrande: What’s Next, What to Watch, and Whether to Buy the Dip

“Evergrande still has plenty of problems to fix including more bond payments later this week, but today’s deal would suggest catastrophe is not immediately around the corner,” Mould added.

Reid of Deutsche Bank noted that the Chinese central bank had increased its short-term cash injections into the economy, adding 90 billion yuan ($13.9 billion) into the system.

Also read: China Evergrande Reaches Deal on Key Domestic Bond Payment. What That Means.

Fears of the U.S. hitting the debt ceiling also quelled, after the House passed legislation Tuesday that would fund the government through Dec. 3 and extend the debt limit until after the 2022 midterm elections.

In commodities, continuous contract futures for copper rose 2.5%, buoyed by Evergrande optimism. Futures for international oil benchmark Brent rose 1.4% to around $75.40 a barrel, while U.S. crude futures similarly rose, to $71.60.

Here are four stocks on the move Wednesday:

While Evergrande
‘s (3333.H.K.) Hong Kong stock wasn’t trading due to a holiday, shares of the company listed in Frankfurt (EV1.Germany) surged near 40% after the group struck a deal related to onshore bond payments.

Entain rose 8.1% in London, after the sports betting and gambling group said it was considering a takeover offer from DraftKings . The shares jumped 19.6% Tuesday following a report of a bid. Meanwhile, DraftKings (DKNG) stock slipped 7.4% Tuesday and the shares were down a further 0.5% in the U.S. premarket.

Gambling peer Flutter (FLTR) lifted 3.6% in London, after the group said it had settled a legal dispute with Kentucky that saw the company staring down the barrel at $1.3 billion in damages and interest. Under the terms of the settlement, Flutter’s payments to the state amount to $300 million.

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