Dow Set to Rise, Energy Crunch Hits Chinese Factories—and What Else Is Happening in the Stock Market Today

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Chinese manufacturing in September has been damped by an energy crunch.

AFP via Getty Images

The stock market was rising Thursday as investors put concerns around central bank stimulus in the rearview, while equities in Asia remained under pressure from an energy crisis in China weighing on industrial production.

Futures for the Dow Jones Industrial Average indicated an open 250 points higher, after rising 90 points Wednesday to close at 34,390.

Futures for the S&P 500 and Nasdaq indicated a similar open, but it will take a big surge Thursday for the S&P 500 to avoid its worst monthly performance this year, even as it remains in positive territory for the third quarter of 2021.

Stocks have come under pressure this week in large part from fears around the end of central bank stimulus, as investors look to the U.S. Federal Reserve soon slowing, or tapering, its Covid-19 pandemic-era program of monthly asset purchases. An energy crunch putting pressure on industrial production in China, as well as concerns around inflation, further weighed on markets. 

Investors looked set to brush aside those pressures Thursday.

“Markets are hobbling into the end of Q3 today even if they’ve seen some signs of stabilizing over the last 24 hours following their latest selloff, with equities bouncing back a bit and sovereign bond yields taking a breather from their recent relentless climb,” said Jim Reid, a strategist at Deutsche Bank.

A “taper tantrum” hit markets Tuesday, sending bond yields higher and hurting technology stocks in particular. Elevated yields make future profits less valuable, hitting high-growth companies like tech groups, which are forecast to see profits many years into the future. The yield on the benchmark 10-year U.S. Treasury note was nearing 1.54% early Thursday, but ceased the type of surging seen earlier this week.

“Investors continued to balance the risks of surging energy prices, supply-chain disruptions, and concerns about more persistent inflation,” said Michael Hewson, an analyst at broker CMC Markets. 

“We should get a better idea of sentiment next week, when all this week’s noise is behind us, however it is inescapable that the sudden turnaround in 10-year yields from 1.3% a week ago, to above 1.5% this week, does suggest that bond markets have undergone a significant change in sentiment.”

Overseas, Hong Kong’s Hang Seng Index fell 0.5%. An energy crunch in China has hit industrial production, weighing on sentiment. China’s official manufacturing purchasing managers index fell more than expected to 49.6 in September, from 50.1 in August, amid underperformance from high-energy consuming industries. That is the lowest level since February 2020, when the Covid-19 pandemic most rocked Chinese industry.

The pan-European Stoxx 600 was 0.8% higher.

The dollar remained at its highest level in a year, with the U.S. Dollar Index at 94.3.

U.S. economic data in the day ahead include initial jobless claims for last week, continuing jobless claims for the week of Sept. 18, and revised real gross domestic product for the second-quarter.

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