Here are the most important news, trends and analysis that investors need to start their trading day:
- Dow set to jump after snapping four-day losing streak
- China prepares for possible Evergrande demise, says WSJ
- Initial jobless claims rise instead of decline as expected
- Fed decreased its forecast for economic growth, increased its outlook for inflation
- CDC to vote on Pfizer Covid boosters for older, vulnerable Americans
Dow futures rose more than 200 points Thursday, one day after the 30-stock average and the broader S&P 500 broke four-session losing streaks. The Nasdaq rose for the second straight day. All three stock benchmarks added 1% as investors looked past the troubles at Chinese property giant China Evergrande Group and took comfort in signaling from the Federal Reserve that it had no immediate intentions of removing U.S. monetary stimulus policies. Wednesday's gains put a dent in Monday's plunge and the slide in September, which historically has been a rough month on Wall Street. The Dow was off nearly 4% from last month's record close. The S&P 500 and Nasdaq were off about 3% from their latest record closes earlier this month.
Chinese authorities have told local officials to prepare for a potential collapse of heavily indebted Evergrande, The Wall Street Journal reported Thursday. Local officials described the signals from Chinese authorities as "getting ready for the possible storm" and said the government told them they should step in only at the last minute to prevent spillover effects from Evergrande's demise, according to the Journal. The large developer made a payment on a local bond Wednesday. However, it's unclear if the company will pay interest due Thursday on its offshore bonds.
The U.S. government's weekly look at initial jobless claims unexpectedly rose to 351,000. Economists had expected a decline in new claims for week ended Sept. 18 to 320,000 — near Covid pandemic lows. The prior week was revised higher to 335,000.
After its two-day September meeting, the Fed on Wednesday provided its quarterly economic projections. Officials see the nation's unemployment rate falling to 4.8% this year from the current 5.2%. The June estimate was for a year-end rate of 4.5%.
The Fed's forecasts also decreased numbers for U.S. growth, increased inflation expectations and pushed up the timing for an interest rate hike. The Federal Open Market Committee now sees gross domestic product rising just 5.9% this year. Core inflation is projected to increase 3.7% this year. Against that backdrop, the Fed left near-zero interest rates unchanged Wednesday afternoon. But most members now see the first rate increase in 2022. The Fed gave no timetable for tapering its bond purchases. However, Fed Chairman Jerome Powell said during his post-meeting news conference that if the recovery remains on track, "a gradual tapering process that concludes around the middle of next year is likely to be appropriate."
The CDC may vote Thursday on the FDA's decision to authorize a Pfizer Covid booster shot for people 65 and older as well as other vulnerable Americans six months after they complete their first two doses. If the CDC approves, booster shots for those groups could begin immediately. But that would not go as far as the Biden administration's push to offer boosters to the general public as early as this week.