Stocks bounce back ahead of Fed decision

By CNN Business

Updated 8:00 a.m. ET, September 23, 2021
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8:00 a.m. ET, September 23, 2021

Former Treasury secretaries send urgent warning on debt limit

From CNN Business' Matt Egan

A bipartisan group of former US Treasury secretaries warned Congressional leadership Wednesday that waiting until the last minute to raise the debt ceiling raises the risks of an “accidental default” that would be disastrous for the economy.

“Even a short-lived default could threaten economic growth,” the letter to House Speaker Nancy Pelosi reads. “It creates the risk of roiling markets, and of sapping economic confidence, and it would prevent Americans from receiving vital services. It would be very damaging to undermine trust in the full faith and credit of the United States, and this damage would be hard to repair.”

The letter was signed by Henry Paulson, who served under Republican President George W. Bush, as well as four former Treasury secretaries under Democrats: Michael Blumenthal, Robert Rubin, Timothy Geithner, Larry Summers and Jack Lew.

“As former Treasury secretaries, we write to express our deep sense of urgency that Congressional leadership, working with the Administration and the President, move swiftly to initiate and complete a viable legislative process necessary to raise the debt limit,” the former officials said. 

The letter acknowledges the polarized state of American politics – but stressed that shouldn’t cause a US default.

“For 232 years, our nation has consistently paid all of its bills, in full and on time,” the letter reads. “Unshakeable creditworthiness has long been a wellspring of strength for our nation, and protecting it is a sacrosanct responsibility. No Congress or President has allowed our country to default.” 

Update: This post has been updated to reflect that Jack Lew also signed the letter.

12:38 p.m. ET, September 22, 2021

Dow climbs nearly 450 points around midday

From CNN Business' Anneken Tappe

It's lunchtime and stocks are still in the green. Looks like this Wednesday turnaround might really happen.

The Dow is up 1.3%, or nearly 450 points, while the S&P 500 is up 1.2%.

The Nasdaq Composite is trailing behind ever so slightly, up 1.1%.

That said, investors will only have eyes (and ears) for Federal Reserve Chairman Jerome Powell this afternoon. The Fed's policy update is due at 2pm ET, followed by the press conference at 2:30pm ET.

11:39 a.m. ET, September 22, 2021

America's housing market is still on fire, even as existing home sales dropped in August

From CNN Business' Anneken Tappe

America's housing market is still in a weird place. The pandemic spurred a buying frenzy that drove the cost of buying a home so high that even more people are priced out of the nation's real estate.

"Everyone knows about shortages that we're experiencing these days," and housing is on that list, too, said BMO Senior Economist Jennifer Lee in a note to clients.

Actually, it's been that way for a while.

"Strong demand, supply can't keep up, prices rise, you know the drill. And those factors combined pulled US existing home sales lower in August," Lee said.

Existing home sales dipped last month, falling to 5.9 million from 6 million in July. This slight drop could be a harbinger of a long awaited slowdown in the sector.

"After reaching a pandemic-driven frenetic pace last year, the housing market has stabilized," said PNC senior economist Abbey Omodunbi. "House prices have increased at an extraordinary pace, leaving many potential buyers on the sidelines."

In the near-term, low borrowing costs, improvements in the job market as the economy recovers and options to work remotely will continue to fuel demand for homes, Omodunbi added.

10:41 a.m. ET, September 22, 2021

FedEx shares slide following weak earnings

From CNN Business' Jordan Valinsky

FedEx (FDX) shares slid more than 8% in premarket trading following a weaker-than-expected earnings report.

The shipping company said late Tuesday that its first quarter results were "negatively affected" because of a "constrained labor market which impacted labor availability, resulting in network inefficiencies, higher wage rates, and increased purchased transportation expenses."

Those issues resulted in a $450 million year-over-year increase in costs and a 7% drop in quarterly profits. As a result, FedEx lowered its full-year earnings forecast.

Shares are down roughly 10% for the year.

9:33 a.m. ET, September 22, 2021

Stocks open higher

From CNN Business' Anneken Tappe

US stocks opened higher on Wednesday ahead of the Federal Reserve monetary policy update at 2pm ET.

It’s been a turbulent week for stocks: Monday brought a big selloff on worries about the debt crisis of Chinese real estate giant Evergrande, as well as America’s own debt ceiling debate.

6:32 a.m. ET, September 22, 2021

China's Evergrande meets crucial debt deadline but another looms

From CNN Business' Laura He

China's Evergrande Group will pay interest due Thursday on one of its bonds, but it's keeping rattled investors guessing about the fate of second, bigger payment due this week.

The troubled Chinese real estate conglomerate said Wednesday in a filing with the Shenzhen Stock Exchange that issues regarding a payment on a domestic yuan bond have been "settled through negotiations."

Many questions remain unanswered, though. Evergrande did not elaborate on the terms of the payment. The amount of interest it owes on the bond is about 232 million yuan ($36 million), according to data from Refinitiv.

Read more here.

6:31 a.m. ET, September 22, 2021

US stocks point to a higher open

From CNN Business' Jordan Valinsky and Anneken Tappe

US stocks tried but failed to rebound Tuesday, after concerns about potential contagion from Chinese real estate giant Evergrande's debt crisis led to the worst session for the market in months.

However, stocks appear to be making a turnaround and are higher.

Here's where things stand as of 6:30 am ET:

  • Dow futures rose 226 points or 0.67%
  • S&P 500 futures jumped 0.81%.
  • Nasdaq futures were 0.39% higher.

6:31 a.m. ET, September 22, 2021

Here's why the Fed won't announce tapering this week

From CNN Business' Anneken Tappe

The Federal Reserve is unlikely to take its foot off the stimulus gas pedal this week as the recovery has run into some roadblocks.

Most notably: the Delta variant.

Mere weeks ago, investors were convinced the central bank would announce a tapering of its massive pandemic stimulus program at its September meeting, which began Tuesday. But some somber economic data, including a very disappointing jobs report and changes in consumer sentiment on the back of rising Covid-19 cases, have pushed back expectations for the taper timeline.

Read more here.

6:31 a.m. ET, September 22, 2021

American Airlines and JetBlue sued by DOJ over their airline alliance

From CNN's Christina Carrega and Pete Muntean

The Department of Justice has sued two major airlines on Tuesday, alleging the companies created an alliance that raised prices and reduced choice for air passengers traveling to and from major cities in the United States' Northeast region.

JetBlue (JBLU) and American Airlines (AAL) last year created the "Northeast Alliance" that operates out of four major airports in Boston and New York City.

The DOJ says the two companies committed to trading information on which routes to fly, when to fly them, who would fly them, and what size planes to use for each flight.

"The department cannot allow American Airlines to further consolidate the airline industry where competition is already in a critical shortage," Acting Assistant Attorney General Richard A. Powers of the Justice Department's Antitrust Division told reporters.

Read more here.