Futures bounce 1% from Evergrande-led selloff By Reuters

Futures bounce 1% from Evergrande-led selloff
© Reuters. FILE PHOTO: The front facade of the New York Stock Exchange (NYSE) is seen in New York, U.S., February 16, 2021. REUTERS/Brendan McDermid/File Photo

By Sagarika Jaisinghani and Ambar Warrick

(Reuters) – U.S. stock futures rebounded on Tuesday as investors tried to shake off fears of contagion from a potential collapse of China’s Evergrande, although gains were capped by concerns the Federal Reserve could set out a timeline to taper its stimulus at the meeting this week.

Futures tracking the blue-chip Dow, which houses several stocks sensitive to the economy, jumped 0.97%, a day after the index tumbled 1.8% in its worst day since late-July.

World stocks struggled to find footing amid concerns that a potential default by Evergrande, which owes $305 billion, could ripple across China’s property sector, banks and the broader economy. [MKTS/GLOB]

“While street wisdom is that Evergrande is not a ‘Lehman risk’, it is by no stretch of the imagination any meaningful comfort,” analysts at Mizuho wrote in a client note.

“It could end up being China’s proverbial house of cards … with cross-sector headwinds already felt in materials/commodities.”

At 6:28 a.m. ET, were up 37.25 points, or 0.86% and 110.25 points, or 0.73%.

The dropped substantially below its 50-day moving average on Monday, its first major breach in more than six months. The average has served as a floor of sorts for the index this year.

Freeport-McMoRan (NYSE:) Inc led mining stocks higher with a 3% jump, following a 3.2% plunge in the S&P mining index a day earlier as prices hit a one-month low. [MET/L]

Interest rate-sensitive banking stocks also bounced, tracking a rise in Treasury yields. [US/]

Attention on Wednesday will be on the results of the Fed’s policy meeting, where the central bank is expected to lay the groundwork to ease its stimulus, although the consensus is for an actual announcement to be delayed until the November or December meetings.

Taper fears have already roiled markets so far in September, setting the S&P 500 on course to snap a seven-month winning streak.

Heavyweight technology stocks, including Apple Inc (NASDAQ:), Tesla (NASDAQ:) Inc, Facebook Inc (NASDAQ:) and Alphabet (NASDAQ:) Inc, rose between 0.8% and 1.1%.

The CBOE volatility index, known as Wall Street’s fear gauge, fell from a four-month high hit on Monday.

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