Wall Street rebounds from recent losses, Dow rises 200 pts; Fed in focus

FedEx falls on profit drop, forecast cut; Energy stocks lead early gains

U.S. stock indexes rebounded from recent losses on Wednesday as concerns over a default by China's Evergrande eased, with investors now awaiting policy cues from the Federal Reserve's meeting later in the day.

Evergrande's main unit said it had negotiated a deal with bondholders to settle interest payments on a domestic bond, which helped calm fears of an imminent default that could unleash global financial chaos.

Energy stocks were the best performers in early trade, rising 2.8% as oil prices rose, while financials added 1.3%, with major banks tracking higher Treasury yields.

Still, Wall Street indexes are nursing steep losses in September, as fears of an Evergrande default exacerbated seasonally weak trends and saw investors pull out of stocks trading at lofty valuations.

As of Tuesday's close, the S&P 500 had tumbled 4.2% from an intraday record high hit earlier in the month.

Uncertainty over U.S. fiscal spending and a potential hike in corporate taxes have also chipped away at stocks this month.

Focus now turns to the Fed's decision, due at 2 p.m. ET (1800 GMT) where the bank could possibly unveil plans to begin scaling back its massive coronavirus-related stimulus measures.

Positive readings on retail sales and factory activity this month had strengthened expectations for a taper announcement from the central bank by as soon as September.

But weakness in the stock market had analysts questioning whether the Fed would risk further volatility, given that any concrete announcement on tapering would likely trigger more stock selling.

"The recent stock market turmoil, looming fiscal cliff and surprisingly weak August jobs report will give Federal Reserve Chair Jerome Powell convenient excuses to reiterate his intent to taper, but allow him to fall short of actually committing to a November start to tapering," said Danielle DiMartino Booth, CEO and chief strategist of Quill Intelligence in Dallas, Texas.

"The Fed announcing a November start for tapering theoretically should not surprise markets. But ... a firm commitment by the Fed to begin tapering purchases in early November could rattle markets."

At 09:47 a.m. ET the Dow Jones Industrial Average rose 206.94 points, or 0.61%, to 34,126.78, the S&P 500 gained 19.63 points, or 0.45 %, to 4,373.82 and the Nasdaq Composite gained 33.03 points, or 0.22 %, to 14,779.43.

The Nasdaq has fallen the least among its peers this month, as investors pivoted back into big technology names that had proven resilient through the pandemic.

Among individual stocks, FedEx Corp tumbled nearly 8% on posting a lower quarterly profit, and as the delivery firm cut its full-year earnings forecast.

Advancing issues outnumbered decliners by a 4.5-to-1 ratio on the NYSE and by a about a 2.3-to-1 ratio on the Nasdaq.

The S&P 500 posted no new 52-week highs and five new lows, while the Nasdaq recorded 25 new highs and 30 new lows.