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Wall Street posts biggest daily gain in a month as bond yields fall

Economy Sep 08, 2022 07:31AM ET
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© Reuters. A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 6, 2022. REUTERS/Brendan McDermid
 
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(In Sept 7 story, corrects headline to note biggest pct gain in four weeks, not four-week high)

By Carolina Mandl and Chuck Mikolajczak

(Reuters) -U.S. stock indexes climbed the most in roughly a month as bond yields eased, with investors shrugging off hawkish remarks made by Federal Reserve officials on Wednesday.

The last time the Nasdaq Composite, S&P 500 and the Dow Jones Industrial Average reached a higher one-day percentage jump was on Aug 10, although investors doubt this is a long-lasting trend.

The technology-heavy Nasdaq led gains among the main indexes, snapping a seven-session losing streak.

U.S. stocks have sold off sharply since mid-August after hawkish comments from Fed Chair Jerome Powell were compounded by signs of an economic slowdown in Europe and China and aggressive steps by major central banks to tame inflation.

Data signaling strength in the U.S. economy has prompted traders to bet on a 75-basis-point interest rate hike by the Fed later this month. Fed fund futures implied investors were pricing in a more than 76% chance of such a move.

The 10-year Treasury yield slipped from three-month highs hit earlier in the session, boosting shares of rate-sensitive stocks such as Tesla (NASDAQ:TSLA) Inc, Microsoft Corp (NASDAQ:MSFT) and Amazon.com Inc (NASDAQ:AMZN).

High-growth companies such as those in the tech sector tend to benefit when yields go down as it means a lower discount rate on their future profits when investors are calculating valuations.

Still, investors are looking for more outward signs of how Federal Reserve rate hikes will unfold to tame a surging inflation before its next meeting later this month.

"The bond markets behaving a little bit better today which is giving the stock market a little bit of a better feeling, but the big worries are still what the Fed is going to do on Sep 21. So we're seeing a back and forth tug-of-war each day," said Brent Schutte, Chief Investment Officer at Northwestern (NASDAQ:NWE) Mutual Wealth Management Company.

Stocks' performance also ignored hawkish comments by Federal Reserve earlier on Wednesday. Cleveland Federal Reserve Bank President Loretta Mester said the high cost of U.S. rental accommodation has not yet fully filtered through to inflation measures, suggesting inflation may still rise further.

Meanwhile, Richmond Fed President Thomas Barkin said the U.S. central bank must lift interest rates to a level that restrains economic activity and keep them there until policymakers are "convinced" that inflation is subsiding, while Federal Reserve Vice Chair Lael Brainard added the monetary policy will need to be restrictive "for some time."

The main focus will be on Powell's speech on Thursday and U.S. consumer price data next week for clues on the path of monetary policy.

The Fed's "Beige Book", a periodic snapshot of the health of the U.S. economy, indicated that price pressures are expected to persist at least through the end of the year.

The Dow Jones Industrial Average rose 435.98 points, or 1.4%, to 31,581.28, the S&P 500 gained 71.68 points, or 1.83%, to 3,979.87 and the Nasdaq Composite added 246.99 points, or 2.14%, to 11,791.90.

Ten of the 11 major S&P sectors were trading higher, led by a jump in utilities, reflecting the defensive positioning by investors due to economic uncertainties.

The energy index fell 1.16% as oil prices tumbled about 5% on demand worries related to looming recession risks. Brent crude fell below $90 a barrel.

Nio (NYSE:NIO) Inc reversed earlier losses and ended the session up 2.16% after the Chinese electric vehicle maker reported a bigger second-quarter adjusted net loss but revenue topped expectations.

Coupa Software (NASDAQ:COUP) Inc jumped almost 18% after the payment management software firm beat second-quarter estimates for revenue and profit.

Volume on U.S. exchanges was 10.21 billion shares, compared with the 10.43 billion average for the full session over the last 20 trading days.

Advancing issues outnumbered declining ones on the NYSE by a 3.07-to-1 ratio; on Nasdaq, a 2.60-to-1 ratio favored advancers.

The S&P 500 posted 6 new 52-week highs and 16 new lows; the Nasdaq Composite recorded 24 new highs and 231 new lows.

Wall Street posts biggest daily gain in a month as bond yields fall
 

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Comments (15)
Kazimierz Nowak
Kazimierz Nowak Sep 08, 2022 9:42AM ET
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Some one said
Kazimierz Nowak
Kazimierz Nowak Sep 08, 2022 9:40AM ET
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Rebels of the bulls in bearmarket are always ****** crush
Joe Rizzuto
Joe Rizzuto Sep 08, 2022 7:06AM ET
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in other words, this fed has made mistake after mistake going into high inflation and they will likely make many mistakes coming out.
Sep 07, 2022 2:06PM ET
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12250 is the resistance level for US100
Diyor Diyor
Diyor Diyor Sep 07, 2022 2:06PM ET
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hello
Diyor Diyor
Diyor Diyor Sep 07, 2022 2:06PM ET
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have you got aksiya
Diyor Diyor
Diyor Diyor Sep 07, 2022 2:06PM ET
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I really wonts be businessman
Vito Tagliano
Vito Tagliano Sep 07, 2022 2:00PM ET
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75 Bases point rate Hike, thats Feds path! Then 25 basis point after until December. January 2023 Reevaluation of Inflation.
Andrew Sim
Andrew Sim Sep 07, 2022 1:13PM ET
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yeah the bull market is back , rally will continue to discover a new all time high
Kris Jay
Kris Jay Sep 07, 2022 1:08PM ET
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Yea!!  Powell found a kleenex in his pocket which is worth $0.04, that's a sign that there is money to be found which will bolster stocks up!  I'm pushing the market to the moon!  Fed hikes?  There was a kleenex in his pocket!  SP500 to 5000!   Apple has a new gizmo so that means the bear market is over Yea!   -  overheard from a retail trader
Vito Tagliano
Vito Tagliano Sep 07, 2022 12:47PM ET
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This what we call Modern Day “Deat Cat 🐱Bounce”
Benny Azur
Benny Azur Sep 07, 2022 12:47PM ET
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EUROPE    , is all    with TRUMP  FOR PRESIDENT !
Benny Azur
Benny Azur Sep 07, 2022 12:44PM ET
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at the end of trading the Nasdaq will close in Red !!!! They are taking us all for the ******here! it is time for Powell and his Compare Biden to leave for the good of the US, and the whole world. EVER TRUMP FOR A LIFETIME))))))
Show previous replies (3)
First Last
First Last Sep 07, 2022 12:44PM ET
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Benny Azur   "Yeah" -- good to see you agree,
GD
GD Sep 07, 2022 12:44PM ET
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Benny Azur  lol its the Rich vs the Poor, not democrat vs republican. Wake up buddy
Benny Azur
Benny Azur Sep 07, 2022 12:44PM ET
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G D  Friend, you are right, but all this is due to the incompetence of Biden and the Democrats rather than making wars think of the well-being of the country and its citizens.
Benny Azur
Benny Azur Sep 07, 2022 12:44PM ET
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GD  Misguided boy, They are the Speculators (which your Democratic government) allows them to do whatever they want.
First Last
First Last Sep 07, 2022 12:44PM ET
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Benny Azur  The carried interest loophole gets more support from GOP than from Dem
 
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