Stocks surged Thursday, with the Dow turning positive for the week, amid a dovish statement on bond-market tapering from the Federal Reserve and cautious optimism that a workable solution can be found for indebted property giant China Evergrande.
The Dow Jones Industrial Average jumped 602 points, or 1.76%, to 34,860, while the S&P 500 gained 1.54% and the tech-focused Nasdaq rose 1.23%.
China Evergrande shares soared in Hong Kong trading as investors got their first crack at the shares following the indebted property developer’s pledge to repay yuan-based creditors earlier this week.
“A hawkish Fed was surprisingly welcomed by equity markets as it was seen as a confirmation of continued strength and ‘substantial progress’ made by the economy in recovering from the Covid shock,” said Anu Gaggar, global investment strategist for Commonwealth Financial Network.
“So far, the market had welcomed bad news as good news, but a market reacting to signs of an economy able to stand on its own without the monetary policy crutches is a refreshing change.”
Gaggar said that China’s government has instructed Evergrande not to default on the interest payments on the USD-denominated bonds that are due today, even as local officials have been ordered to step in should Evergrande’s unwinding become disorderly.
“There is a 30-day grace period for making the interest payment but, for now, investors were somewhat reassured by the government’s intervention,” Gagger said.
In company news, Boeing rose after boosting its long-term forecast for China aircraft sales to around $1.5 trillion.
Darden Restaurants hit an all-time high after the Olive Garden owner beat Wall Street’s first-quarter earnings expectations, raised its quarterly dividend and unveiled a stock buyback.
Salesforce .com jumped after the cloud and business software group boosted its 2022 revenue guidance ahead of its annual investor day conference.
This article was originally published by TheStreet.