Indexes end with strong gains, rebounding from global market rout
REUTERS/BRENDAN MCDERMID/FILE PHOTO
Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, on May 16. U.S. stocks ended sharply higher today as investors jumped back into the market a day after a dramatic sell-off, as recent comments by Federal Reserve officials eased U.S. recession worries.
U.S. stocks ended sharply higher today as investors jumped back into the market a day after a dramatic sell-off, as recent comments by Federal Reserve officials eased U.S. recession worries.
All major S&P 500 sectors also rose sharply.
U.S. central bank policymakers pushed back against the idea that weaker-than-expected July jobs data means the economy is headed for a recession, but they also warned that the Fed will need to cut interest rates to avoid such an outcome.
Nvidia gave the biggest boost to the S&P 500 and Nasdaq.
“The market had just gotten top heavy, but it did reprice a decent amount, particularly the Nasdaq, and people are coming back to the idea that with lower rates it should provide a support for stocks,” said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
According to preliminary data, the S&P 500 gained 51.66 points, or 1.00%, to end at 5,237.99 points, while the Nasdaq Composite gained 166.77 points, or 1.03%, to 16,366.86. The Dow Jones Industrial Average rose 284.86 points, or 0.74%, to 38,988.13.
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Traders are pricing in a 75% chance the Fed will cut rates by 50 basis points at its next policy meeting in September and a 25% chance of a 25 basis point reduction, the CME Group’s FedWatch Tool showed.
Stocks have sold off after the weak economic data raised worries of a U.S. recession.
Market concerns were exacerbated as investors wound down yen-funded trades, used to finance the acquisition of stocks for years, after a surprise Bank of Japan rate hike last week.
The next big Fed event is Chair Jerome Powell’s speech at the Jackson Hole on Aug. 22-24.
Uber shares rose sharply after the ride-sharing and food delivery provider beat Wall Street estimates for second-quarter revenue and core profit, helped by steady demand for its services.
Caterpillar gained after beating analysts’ estimates for second-quarter profit, as higher prices on its larger excavators and other equipment countered moderating demand in North America.
Additional reporting by Shubham Batra and Shashwat Chauhan in Bengaluru.
