US Stocks Headed Higher After Marginal Gains Last Week

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Key Takeaways

• Stock futures push higher on Monday after Wall Street eked out minor gains last week
• Equities enter the last week of September, so far poised to end the month in losses

Stocks Poised to Open Higher on Monday

US stock is heading into a higher open on Monday following a tumultuous week rattled by Evergrande-led uncertainties. Stock index futures in the early hours ahead of today’s regular session pointed higher. Dow Jones Industrial Average futures were higher by about 150 to 200 points. S&P500 futures and Nasdaq futures were up by 0.3% apiece.

Stocks are aiming to build on last week’s modest advance when investors struggled to finish into the green. Market participants powered through significant risks posed by real-estate developer China Evergrande Group.

Evergrande Threat Persists

Jitters spread over the financial markets globally as a potential Evergrande collapse threatened to derail the already slowing economic growth. Still, the highly indebted Chinese property giant is yet to make payments to its investors and creditors.

And with every passing day, the chances of a potential default get bigger. Last week, the company missed an interest payment of $83.5 million. Unless the payment is made within 30 days after the deadline, Evergrande would default.

Wall Street Ekes Out a Weekly Gain

Despite the gloomy fate of Evergrande, the Dow Jones Industrial Average and the S&P500 turned higher on Friday. The 30-stock Dow Jones finished the day with a gain of 33.18 points, or 0.10%, to 34,798.00. The broader S&P500 added 6.50 points, or 0.15%, to 4,455.48. The technology-centered Nasdaq Composite slipped modestly by 4.54 points, or 0.03%, to end the session at 15,047.70.

Investors were able to close the week in the green after a massive selloff roiled the broader markets on Monday. A wave of selling was sparked by fears of Evergrande crumbling under its $300bn debt. Still, traders were quick to buy the dip on Wednesday when Federal Reserve Chairman Jerome Powell stepped in and helped boost confidence. Mr. Powell stated the economy has made substantial further progress and the US central bank is ready to start reversing its easy-money policies.

Market participants then increased their risk appetite for stocks. The Dow Jones ended the week higher by 0.6%. The S&P500 added 0.5% since Monday, while the Nasdaq Composite finished the week near the flat line. Nevertheless, all three major indexes are on pace to finish the month in decline. The roller-coaster month of September has seen the S&P500 losing 1.5%. The Dow is off by 1.6% for the month, and the Nasdaq is down 1.4%.

In Other Markets Today

In Europe, stocks opened Monday’s trading on a positive note after the German elections pointed to a win for the Social Democratic Party. Last week, stocks finished sour as European investors were increasingly concerned if banks in Europe could be hit by a collapse of Evergrande.

Bitcoin pushed above the $44,000 milestone earlier today. The leading cryptocurrency was unfazed by the latest crackdown from China. The People’s Bank of China, the central bank of the country, issued another ban on all crypto-related activity on Friday. This time around, there was little effect on the price of bitcoin and other major tokens.

What to Watch in the Markets

Looking ahead into the week, trading opportunities will be plenty as there are many economic events and developments to digest. European Central Bank President Christine Lagarde will speak to a European Parliament committee today. On Tuesday, Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen will testify before Senate in a discussion on the US economic recovery.

As a result, increased fluctuations could be expected in the US dollar and the euro as well as in precious metals. Stocks in general are also bound to experience heightened volatility.