The stock market finished today on a strong note, though a bit choppy after the Federal Reserve meeting.
The S&P (SP500)+0.9%, Nasdaq (COMP.IND)+1.0% and Dow (DJI)+1.0% are all up following some positive news on the Evergrande front.
S&P sectors all finish in the green. The volatile Energy sector is at the top again, followed by Financials and Technolog. Healthcare is lagging.
Megacaps are mostly higher, with Facebook the one exception.
The bond market is playing it cool, with the 10-year Treasury yield down 1 basis point at 1.31%.
Equities rebound today after Bloomberg reported that Hengda Real Estate, the main unit of troubled Chinese property developer Evergrande, will make its Thursday bond coupon payment.
"Equity markets seem to be taking a calmer view of a possible default by a Chinese property developer - the macroeconomic implications of this (especially outside of China) are likely to be very limited," UBS Chief Economist Paul Donovan writes. "There are longer-term considerations about appropriate risk premiums."
The dot plot forecasts "made prior to the meeting by individual participants will show weaker growth, higher inflation & sooner, faster rate hikes than in June," Grant Thornton's Diane Swonk tweets. "Those shifts will complicate Powell’s goal to decouple a tapering of Fed’s asset purchases from the liftoff in rates."
"Why is that important? Because asset purchases were used to stabilize financial markets & prevent pandemic-recession from morphing into larger problem," she says. "Until very recently, one could argue that asset purchases had outlived their usefulness & spurred asset bubbles."
"The meltdown of a large real estate fund in China, Delta spread & our own political shenanigans could undermine fin stability & could challenge that premise."
Today's Fed talk was "definitely a case of 'taper talk lite' out of the Fed statement. But what the hawks couldn't achieve as a Committee they got in raising their 'dot plot' projections - what matters most is the statement; that's where Powell has his stamp... "if" & "may" when it comes to the taper," said chief economist & strategist of Rosenberg Research David Rosenberg in a tweet.