Wall Street rally set to fizzle out as Evergrande worries persist

Finance | 24 Sep 2021 9:34 pm

U.S. stock indexes were set to open lower on Friday following a strong two-day rally, as worries persisted about the spillover from debt-laden China Evergrande, while Nike tumbled after cutting its sales forecast.

Big banks including JPMorgan, Citigroup, Morgan Stanley and Bank of America Corp slipped about 0.5%, while oil majors Exxon Mobil and Chevron Corp were down 0.4% and 0.3%, respectively, in premarket trading.

The banking sub index and the S&P energy sector have gained nearly 2.5% and 3.8% so far this week.

Wall Street's main indexes have been roiled this month by fears of a sooner-than-expected tapering by the Federal Reserve and the crisis at Evergrande, which on Thursday missed an interest payment deadline and has entered a 30-day grace period.

The benchmark S&P 500 is now on course to snap a seven-month gaining streak.

On the week, however, the index is still set to post modest gains, with investors shrugging off signals from the Fed that it would reduce its monthly bond purchases as soon as November and that interest rates could rise quicker than expected.

"We are taking some breather (from the two-day rally), (but) there is some uncertainty out of China that the market wants a little clarity on," said Thomas Hayes, managing member at Great Hill Capital LLC in New York.

"But the key theme is the shift back to the value reopening and cyclical trade ... and we should expect to see a move back into reopening into the end of the year in the face of a rising (interest) rate environment."

The S&P 500 value index is up nearly 0.6% this week, outperforming its tech-heavy growth counterpart and on track to break a three-week losing streak.

At 7:57 a.m. ET, Dow e-minis were down 136 points, or 0.39%, S&P 500 e-minis were down 21.5 points, or 0.48%, and Nasdaq 100 e-minis were down 97.25 points, or 0.64%.

A downbeat annual sales forecast by Nike Inc dragged the sportswear maker's shares lower by 5.2%, with the stock set to weigh on the Dow and the S&P 500 after market open.

Shares of peer Under Armour also fell 1.9%, while footwear retailer Foot Locker dropped 3.3%.

Mega-cap growth names Alphabet Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc, Apple Inc and Tesla Inc slid between 0.6% and 1%.

Shares of cryptocurrency-related firms Coinbase Global, MicroStrategy Inc, Riot Blockchain and Marathon Patent Group tumbled between 3.5% and 7.3% after China's central bank vowed to crack down on cryptocurrency trading. -- Reuters 

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