With the trading week starting at a note of sharp-sell off, the share market saw a rebound in stocks following Tuesday, where shares of Microsoft
The major indexes on Wednesday showed a modest improvement, bouncing back from sharp morning lows amid McConnell debt-limit offer. A sign of optimism could be linked with the stock market rally attempt, but still, a market correction is in sight for now.
U.S. Tech Gian– Facebook’s
The Dow Jones Industrial Average closed 0.30% up, while the S&P 500 (SPX) finished 1.05% higher on Tuesday and 0.41% on Wednesday. The Nasdaq Composite (COMP) closed up 1.25 higher on Tuesday and 0.47% on Wednesday.
In fact, Tuesday turned the sulked market into buoyancy. While stocks were bouncing back to the upward trajectory, the 20 plus-year US Treasury bond yield also rose by 0.56% on Wednesday when the normal day stock market closed. Bond yields and prices showed an inversely related relationship with each other.
On Monday tech stocks were bleeding in red, but on Tuesday they turned out to be big gainers. Inflation worries could not hold the tech stocks back from booking profits on Tuesday as investors used the opportunity to pick up shares at a discount.
Crude oil futures sank 2%, extending Wednesday’s losses. Energy prices showed a sigh of temporary relief in Europe, whereas natural gas prices shot up.
The 10-year Treasury yield moved up a bit by 1.53%.
Having said that, Tuesday’s rally was broad-based with many of the sectors registering gains.
“Besides the fact that it’s Tuesday and we had a big sell-off yesterday (on Monday), there’s really not much driving the action this morning,” said market analysts at Bespoke Investment Group in a note.
This isn’t the first time the market has changed colours so dramatically in the days following a sell-off. That’s the current state of how Wall Street is performing.
Investors have an array of worries to deal with: starting with the speed of the recovery heading into the winter, the trigger of inflation, potentially higher taxes, Washington’s limbo over debts, the Chinese property developer — Evergrande Mishap and the Energy Crisis looming over the world amongst others.
Investors are curiously waiting for the monthly payrolls data later this week that would play a key consideration in the U.S. Federal Reserve’s decision on when to scale back monetary stimulus.
But, each time when any of these concerns subsidizes, the market shifts gear and comes back to its track approaching new highs. But, as per Michael Reinking, senior market strategist at the New York Stock Exchange, Considering the upheavals of the market in the recent past, “the S&P is actually pretty much unchanged.”
It is seen that almost all of the 11 major S&P 500 sector indexes recovered from Monday’s bad business, with financials, communication services, and technology emerging as outliers.
In A Brief: Mitch McConnell Debt-Limit Offer, A Temporary Fix-Up
The United States is almost 12 days or less away from the government’s deadline to breach the debt ceiling, but the leaders in the nation’s capital are in a fix about how to ward off a default.
The House of Representatives gave their approval to a bill to extend the borrowing limit through December 2022, but the bill had to face gridlock in the Senate ahead of an expected procedural vote on Wednesday.
When the house met on Wednesday, Senate minority leader McConnell said Republicans would not obstruct the path of Democrats and allow them to pass a two-month debt-limit extension via normal procedures. Additionally, it would push off the possibility of government default.
Treasury Secretary Janet Yellen suggested Oct. 18 to be the deadline, though other reports say that Treasury may avert a destabilizing default until early November.
As per the Yahoo report, McConnell put forth that Republicans would not filibuster the debt ceiling extension “into December” if Democrats attached a dollar amount on the increase, giving them a window to enact a long-term solution on their own.
“This will moot Democrats’ excuses about the time crunch they created and give the unified Democratic government more than enough time to pass standalone debt limit legislation through reconciliation,” McConnell, R-Ky., said in a statement.
The offer poses more of a short-term fix as the nation faces an October 18 deadline to lift the limit. But the deal is yet to be done as Senate Majority Whip Dick Durbin, D-Ill., said Democrats have received a written offer from McConnell.
Sen. Sheldon Whitehouse, D-R.I., said on MSNBC that Democrats should accept the short-term fix so they can “finish up the deal-making between the White House and Speaker [Nancy] Pelosi and Sen. [Chuck] Schumer and make sure our caucuses are all united and pass Build Back Better.”
Ahead of the meeting, Sen. Chris Coons, D-Del, a close aide of President Joe Biden said McConnell’s demand for a dollar figure may be problematic for Democrats.
Several Democrats hesitated to accept the proposal of putting a value on the increase as they would prefer instead to prolong the limit until a specific date.
The drama in Congress grew when McConnell’s announcement postponed a procedural vote set for Wednesday that would extend the debt ceiling suspension until December 2022. The motion requires 60 votes to what the Treasury Department calls an economic disaster if the country misses the deadline.
Sen. Mazie Hirono, D-Hawaii, condemned McConnell’s plan, calling him “heartless” and urging her party to reject it, warning that it would solve the standstill.
“Why should we accept any part of a BS offer?” she said.
Quickly after McConnell’s statement was released, Sen. Rick Scott, R-Fla., tweeted: “I will not vote to raise the debt ceiling. Period.”
White House press secretary Jen Psaki said McConnell did not make any formal offer and regardless, “even the scant details that have been reported present more complicated, more difficult options than the one that is quite obvious in the president’s view.”
“So, they’re discussing up there, we’ll obviously be in close touch with them as we continue to be, and we’ll see where we are at the end of today,” Psaki said at a press briefing on Wednesday.
Grand Old Party leaders have been reiterating that for a time now that they will not support a debt limit hike, although they always affirmed it to be done.
President Joe Biden and Democrats have rejected the idea of using the convoluted budget reconciliation procedure and lifting up the debt ceiling, calling it burdensome and time-consuming.
Before McConnell’s statement, one option that Senate Democrats kept in consideration was to change filibuster rules to allow a simple majority of the Senate to pass a debt ceiling extension. But they would need the support of 50 Democratic votes.