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Wall Street jumps with rosy outlooks from companies

Published 03/29/2023, 05:26 AM
Updated 03/29/2023, 07:05 PM
© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 28, 2023.  REUTERS/Brendan McDermid

By Caroline Valetkevitch

NEW YORK (Reuters) - U.S. stocks rallied on Wednesday, with all three major indexes ending up at least 1% as upbeat outlooks from Micron Technology (NASDAQ:MU) and other companies eased some worries about the health of the economy.

In a sign of potential further strength, the S&P 500 also closed above its 50-day moving average for the first time since March 6, before the onset of the bank crisis, and the CBoe volatility index, Wall Street's fear gauge, ended at its lowest level since March 8.

Micron shares shot up 7.2%, boosting the Nasdaq and S&P 500, and leading gains in the PHLX semiconductor index, which closed 3.3% higher.

The memory chip maker late Tuesday forecast a drop in third-quarter revenue in line with Wall Street expectations, while it gave a rosy outlook for 2025 with artificial intelligence boosting sales.

Adding to the optimism, Lululemon Athletica (NASDAQ:LULU) Inc jumped 12.7% after an upbeat annual results forecast.

"We had a couple of good reads into the economy from a couple of companies," said King Lip, chief investment strategist at BakerAvenue Wealth Management in San Francisco.

"Micron is sort of a microcosm of the global economy because their chips go into so many different industries and sectors. If they are optimistic about things in terms of orders, that means the overall economy is doing well."

Lululemon surges after strong reoprt, https://fingfx.thomsonreuters.com/gfx/mkt/dwpkdkmqkvm/Pasted%20image%201680108260963.png

The bulk of S&P 500 companies begin reporting on the first quarter in mid-April.

Investors are also trying to gauge whether turmoil in the banking system may be subsiding, and what that may mean for Federal Reserve policy.

The Dow Jones Industrial Average rose 323.35 points, or 1%, to 32,717.6, the S&P 500 gained 56.54 points, or 1.42%, to 4,027.81 and the Nasdaq Composite added 210.16 points, or 1.79%, to 11,926.24.

"People are feeling a little more comfortable with each day that passes since we had the failures," said Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.

The banking turmoil, which started earlier in March with the collapse of Silicon Valley Bank, caused a swift selloff in the sector shares and fueled jitters about the strength of the economy.

On Monday, regional U.S. lender First Citizens BancShares scooped up the assets of Silicon Valley Bank.

Michael Barr, Fed Vice Chair for Supervision, told Congress the scope of blame for Silicon Valley Bank's failure stretches across bank executives.

Investors are awaiting Personal Consumption Expenditures data on Friday for further clues on inflation. The Fed has been raising interest rates to bring down inflation.

Advancing issues outnumbered declining ones on the NYSE by a 3.86-to-1 ratio; on Nasdaq, a 2.15-to-1 ratio favored advancers.

© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 28, 2023.  REUTERS/Brendan McDermid

The S&P 500 posted 9 new 52-week highs and no new lows; the Nasdaq Composite recorded 69 new highs and 135 new lows.

Volume on U.S. exchanges was 10.61 billion shares, compared with the 12.73 billion average for the full session over the last 20 trading days.

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