Dow Rebounds as Evergrande Worries Fade

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Stocks were slightly higher Tuesday as Wall Street looked to recover from the biggest single-day decline in nearly four months, sparked by concerns over China’s indebted property giant Evergrande and the start of the Federal Reserve’s crucial policy meeting.

The Dow Jones Industrial Average rose 32 points, or 0.09%, to 34,003 at last check, while the S&P 500 climbed 0.07%, and the Nasdaq advanced 0.25%.

“We’ve been arguing that the US economy is in good shape — the recent COVID-surge notwithstanding — and continuing to improve, however, markets were likely to experience at least a 5% pullback (potentially more) at some point this year and that it was worth keeping focused on the bigger picture,” said Chris Zaccarelli, CIO for the Independent Advisor Alliance.

Housing starts for the month of August rose 3.9%, well ahead of the consensus forecast of a 1% gain, taking the annual pace to around 1.615 million units. Permits for new construction were also notably higher, rising 6% on the month to an annual pace of 1.723 million units.

Nearly all of the August gains, however, were linked to multifamily homes, with new single-family home starts fell 2.8% from July to 1.076 million units.

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Lennar  (LEN) – Get Lennar Corporation Class A Report dipped slightly after the country’s second-largest homebuilder added its name to the list of companies concerned about supply chain disruptions to the housing market. 

“Housing starts coming in strong is a good thing for the economy but it’s hard to tell if the market will care,” said Mike Loewengart, managing director of investment strategy at E*Trade Financial. “Center stage today is if we’ll see a sustained bounce back from yesterday’s selloff.”

Loewengart saids investors have been pretty bullish throughout the pandemic so yesterday’s dip could have been an entry point for some. However, he added, “we have been due for a real correction for some time, and concerns about the Chinese economy’s recent softening are lurking.”

DraftKings  (DKNG) – Get DraftKings Inc. (DKNG) Report slumped following a report that the U.S.-based online gaming company is planning a $20 billion takeover bid, financed mostly with stock, for Britain’s Entain Plc.

Johnson & Johnson JNJ was slightly higher after the drug maker published data showing that a second shot of its coronavirus vaccine provided a significant increase in protection against the disease in a large-scale U.S. trial.