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US stock indices are recovering, but the problem with growth remains

US stock indices are gradually recovering their positions after yesterday's jamming of the Federal Reserve System. Several decisions were made to curtail the bond purchase program at the end of autumn this year. Fears about the Chinese real estate market crisis have somewhat eased, which also encouraged traders to buy assets.

Futures for the Dow Jones Industrial Average rose by 238 points or 0.6%. Futures on the S&P 500 rose 0.6%, and the Nasdaq 100 added 0.6%. Hong Kong's Hang Seng index also recovered more than 1% after a serious drop earlier this week. The Chinese developer Evergrande Group, which caused serious problems in the world stock markets, added more than 17%. Let me remind you that yesterday the company announced that it would make payments on all debt obligations. But, despite the company's statements, many investors are closely watching whether Evergrande will be able to pay $ 83 million in interest on US dollar-denominated bonds today. According to Bloomberg, Chinese state regulators have already instructed Evergrande how to avoid a short-term default on dollar bonds, most likely, of course, not without some help.

Returning to the Federal Reserve meeting topic yesterday, the markets closed in a small plus after the Central Bank kept interest rates unchanged while not indicating immediate intentions to curtail the stimulus policy. So far, the adoption of such a decision has been postponed until November of this year, when the committee's next meeting will be held. It will most likely be that the start of the curtailment of the emergency asset purchase program will be announced. However, the main condition for this will be the progress of the economic recovery. It should continue, despite all the difficulties associated with the next wave of coronavirus this autumn and high inflationary pressure. Let me remind you that the Central Bank announced the launch of a $ 120 billion-a-month bond purchase program last year due to the pandemic that paralyzed the country's economy. As economic conditions improve, more and more members of the Federal Open Market Committee expect the first rate hike to occur in 2022 and not in 2023, as previously expected.


As for the technical picture of the S&P500 index, everything now depends on whether buyers will be able to get above the important value of 4,425 points or not. If we allow a breakthrough in this area, we can count on a larger upward correction to the maximum of 4,488 and then update the August levels in the area of 4,547. If buyers fail to cope with the pressure that remains from the problem with the US debt ceiling, then another wave of decline in the stock index to the support of 4,346 is not excluded, against which the bear market will quickly return with the prospect of updating the level of 4,231.

The material has been provided by InstaForex Company -