By Yasin Ebrahim
Investing.com – The S&P 500 pared gains Tuesday, as the early-day rebound from the biggest daily rout since May appeared to run out of steam amid worries about global growth worries just as the Federal Reserve kicked off its two-day meeting.
The S&P 500 rose 0.4%, the Dow Jones Industrial Average added 0.3%, or 94 points, the Nasdaq added 0.7%.
Cyclical sectors including energy and consumer discretionary clawed back some of Monday’s losses, but gains were kept in check by concerns about a potential economic crisis in China, and implication for global growth, amid concerns that beleaguered real estate giant Evergrande is unlikely to receive a government bail out.
“We believe Beijing would only be compelled to step in if there is a far-reaching contagion causing multiple major developers to fail and posing systemic risks to the economy,” the rating agency said in a note dated Sept 20.
EOG Resources (NYSE:EOG), Marathon Petroleum (NYSE:MPC), and ConocoPhillips (NYSE:COP) led the energy sector higher. ConocoPhillips receive an added boost after Shell (LON:RDSa) said it would sell its Permian Basin assets to the company for $9.5 billion in cash.
Health care stocks were also above the flatline as most vaccine stocks climbed following reports that Washington will mandate that all teachers and school staff must be fully vaccinated against Covid-19 by Nov. 1.
Pfizer (NYSE:PFE) was flat, while BioNTech (NASDAQ:BNTX) rose nearly 2%, and Moderna (NASDAQ:MRNA) was up 3%. Johnson & Johnson (NYSE:JNJ) pared some gains despite releasing positive vaccine results showing that a second dose of its coronavirus vaccine boosts protection for moderate-to-severe Covid-19 to 94%.
Tech struggled to join in the broader market rebound as investors appeared wary of dip-buying in tech following a selloff a day earlier.
Google-parent Alphabet (NASDAQ:GOOGL), Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT), were mostly flat.
Uber Technologies (NYSE:UBER) jumped 13% after the ride-sharing company upgraded its forecast, estimating a potential maiden adjusted profit in third quarter.
The company guided third-quarter gross booking to between $22.8 billion and $23.2 billion up from a prior forecast of between $22 billion to $24 billion.
The rebound on Wall Street comes just as the Federal Reserve kicked off its two-day meeting.
Ahead of the meeting, the Fed’s plan to trim its $120 billion monthly bond purchase program has dominated investor attention, but some say believe the taper has been priced in.
“I think that tapering is priced into the market at this point,” Darren Schuringa, CEO of ASYMmetric ETFs said in an interview with Investing.com on Tuesday. "But higher interest rates are going to be problematic for the consumer and for the economy going forward."
Beyond the taper, however, the central bank’s projections on a first rate hike, currently expected in 2023, could surprise markets.
“If the Fed does signal an earlier rate hike [in 2022], that would be a negative shock to the equity markets, but I don't expect that,” Schuringa added.