Day Traders Diary

9/23/21

The major averages jumped for a second day as fears around a crisis in China's property market eased somewhat and as the Federal Reserve kept current monetary stimulus in place for just a little bit longer.

The Dow Jones Industrial Average surged 506 points, or 1.48%, to 34,764, with steady buying throughout the trading day. Thursday's rally adds to a 338-point gain in the prior session. The S&P 500 rose 53 points or 1.21% to 4,448 while the Nasdaq Composite added 155 points or 1.04% to 15,052.

Thursday gains pushed the major averages back into the green for the week. The Dow and S&P are up now up 0.5% and 0.3%, respectively, while the Nasdaq has inched 0.06% higher for the week.

The Dow dropped more than 600 points on Monday and fell again on Tuesday on concerns about the potential collapse of Chinese developer Evergrande Group rippling through the global economy. But Hong Kong's Hang Seng index rebounded more than 1% overnight with Evergrande rallying more than 17% as investors seemed to bet China wouldn't allow a full failure of the key company and would provide more liquidity for the market.

And the U.S. market got an additional boost from the Fed on Wednesday afternoon with the central bank indicating no immediate removal of stimulus policies. The central bank issued a statement following the meeting that said if progress continues "as expected," then a "moderation in the pace of asset purchases may soon be warranted."

Salesforce led the Dow higher with a 7.2% gain after the cloud company raised its full-year 2022 revenue guidance. Darden Restaurants was among the big S&P movers, jumping 6.1% after reporting strong quarterly earnings.

Stocks linked to a global economic recovery were also higher as fears out of China eased. General Electric shares added about 4.5%. Las Vegas Sands, which has big China exposure, rose 3.2%. Caterpillar added 2.7%.

Energy stocks led the S&P, with APA Corp and Devon Energy up over 7% each as U.S. West Texas Intermediate (WTI) crude futures rose to a high of $73.50 per barrel, its highest level since Aug. 2. Oil settled at $73.30.

Bank stocks got a boost as the 10-year Treasury yield bounced, providing a possible boost to their bottom lines. JPMorgan, Bank of America and Citibank each added over 3%. Regional banks like Regions and Fifth Third, which tend to trade closely along with rates because of their reliance on lending, each closed more than 4% higher.

On Wednesday, Evergrande eased fears a bit by resolving payment on a local bond. But global investors are still waiting on whether the company will pay $83 million in interest on a U.S. dollar-denominated bond due Thursday. Government regulators instructed Evergrande to avoid a near-term dollar bond default, Bloomberg News reported, citing a person familiar. Yet some of Evergrande's bondholders did not expect payment Thursday and had not heard from the company, Reuters reported.

Investors largely looked past the Evergrande crisis as the trading day continued. And they kept buying even after weekly jobless claims rose more than expected last week, showing the strength of the U.S. recovery is still in question.

After Thursday's gains, the S&P 500 is down just 1.6% for September.