US markets due for a correction: Cornerstone Wealth Managing Partner
Cornerstone Wealth Managing Partner Jeff Carbone discusses China’s Evergrande, what to expect from the Fed meeting and U.S. markets.
U.S. stock futures pointed to a higher open Tuesday as the major averages looked to bounce back after worries over the health of China’s real estate sector and uncertainty over Fed policy resulted in the steepest declines in months.
Dow Jones Industrial Average futures rose 290 points, or 0.86%, while S&P 500 futures and Nasdaq 100 futures advanced 0.73% and 0.71%, respectively.
The early gains come a day after the Dow fell by the most in two months. Both the S&P and the Nasdaq on Monday suffered their biggest losses since May.
Investors continue to monitor whether Beijing will step in to save embattled Chinese property developer Evergrande. A report from S&P Global Ratings said such action would only occur "if there is a far-reaching contagion causing multiple major developers to fail and posing systemic risks to the economy."
Closer to home, the Federal Reserve kicks off its two-day policy meeting. Investors will be paying close attention to Wednesday’s decision, which may lay out the path for the central bank to begin tapering its asset purchases.
In stocks, industrials, including Caterpillar Inc. and Freeport-McMoRan, were among the top gainers.
Johnson & Johnson said a second shot of its COVID-19 vaccine given about two months after the first improved its effectiveness to 94% from 70%.
In deals, U.S. Bancorp agreed to buy the personal banking division of Japanese lender MUFG Union Bank’s U.S. business for $8 billion in cash and stock. The deal is expected to close by the end of June.
ConocoPhillips said it will buy Royal Dutch Shell’s assets in the Permian Basin for $9.5 billion cash.
In earnings, Lennar Corp. reported quarterly results that fell short of Wall Street estimates due to supply chain disruptions caused by COVID-19. The homebuilder guided current-quarter deliveries below analyst expectations.
Uber Inc. raised its gross bookings forecast for the current quarter and said it could turn a profit earlier than previously expected.
In commodities, West Texas Intermediate crude oil jumped 83 cents to $71.12 a barrel and gold ticked up $.260 to $1,766.40 an ounce.
Overseas markets were mostly higher.
European bourses rallied across the board with France’s CAC 40 rising 1.46%, Germany’s DAX 30 climbing 1.44% and Britain’s FTSE 100 up 1.19%.
In Asia, Japan’s Nikkei 225 plunged 2.17% and Hong Kong’s Hang Seng index gained 0.51%. China’s Shanghai Composite remained closed for holiday.
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