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Wall St rallies as data, RBA move lifts hope of Fed easing

Economy Oct 04, 2022 06:25PM ET
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© Reuters. A trader works on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., September 13, 2022. REUTERS/Andrew Kelly
 
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By Herbert Lash, Ankika Biswas and Bansari Mayur Kamdar

(Reuters) -The S&P 500 index posted its biggest single-day rally in two years on Tuesday after softer U.S. economic data and Australia's smaller-than-expected interest rate hike stirred hope for less aggressive tightening by the Federal Reserve.

While labor demand remains fairly strong, U.S. job openings fell by the most in nearly 2-1/2 years in August in a sign the Fed's mission to tame inflation by hiking rates was working to slow the economy.

Earlier, the Reserve Bank of Australia surprised markets with a smaller-than-expected interest rate hike of 25 basis points. Its cash rate rose to a nine-year peak after six rate hikes in as many months in a tightening cycle other central banks are engaged in as well.

The RBA is the first major central bank to recognize that now is the time to slow down after aggressively raising rates this year, said Anthony Saglimbene, chief market strategist at Ameriprise Financial (NYSE:AMP) in Troy, Michigan.

"There's hope that the Federal Reserve at some point in the fourth quarter will say the same thing. Not stop raising interest rates, but just slow the pace," he said. "That's what the market's kind of rallying on below the surface."

Still, Fed Governor Philip Jefferson said inflation is the most serious problem facing the U.S. central bank and it "may take some time" to address. San Francisco Fed President Mary Daly said the central bank needs to deliver more rate hikes.

Rate-sensitive tech stocks rose as yields on the benchmark 10-year Treasury fell for a second day in a row after the jobs data and RBA's surprise move. Valuations on tech and other growth stocks fall when their cost of capital rises. [US/]

It was the biggest one-day gain for the S&P 500 since May 2020. The Dow Jones Industrial Average and S&P 500 posted their biggest two-day rallies since April 2020.

The repercussions of higher rates will likely be reflected in corporate results when earnings season begins in two weeks, said Dennis Dick, founder and market structure analyst at Triple D Trading Inc.

"We're still in for a tougher time here. I do think this earnings season is going to not be good," he said. "If one of the big guns warns that could end the rally rather quickly. This is just a relief really as opposed to the start of a new bull market."

Billionaire Elon Musk proposed going ahead with his original offer of $54.20 to take Twitter Inc (NYSE:TWTR) private, two sources familiar with the matter said on Tuesday, sending the social media firm's shares surging 22.24%. Twitter was the largest percentage gainer on the S&P 500.

Tesla (NASDAQ:TSLA) shares had been up about 6% before the news and immediately pared gains, ending up 2.90% on the day.

The megacap titans led the rally, with Amazon.com Inc (NASDAQ:AMZN) climbing 4.50% and Microsoft Corp (NASDAQ:MSFT) advancing 3.38%. Apple Inc (NASDAQ:AAPL) rose 2.56% while Google parent Alphabet (NASDAQ:GOOGL) Inc added 3.04%.

Banks such as Citigroup (NYSE:C), Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS) climbed more than 3%.

The rally was broad based, with just six stocks in the S&P 500 index closing lower.

The Dow Jones Industrial Average rose 825.43 points, or 2.8%, to 30,316.32, the S&P 500 gained 112.5 points, or 3.06%, at 3,790.93 and the Nasdaq Composite added 360.97 points, or 3.34%, at 11,176.41.

Volume on U.S. exchanges was 12.51 billion shares, compared with the 11.63 billion average for a full session over the past 20 trading days

The rebound in stocks on Monday followed the S&P 500's lowest close in nearly two years last week that capped its worst monthly performance in September since March 2020.

Rivian Automotive Inc jumped 13.8% after the electric-vehicle maker said it produced 7,363 units in the third quarter, 67% more than the preceding quarter, and maintained its full-year target of 25,000.

Advancing issues outnumbered decliners on the NYSE by a 6.80-to-1 ratio; on Nasdaq, a 3.70-to-1 ratio favored advancers.

The S&P 500 posted two new 52-week highs and one new low; the Nasdaq Composite recorded 53 new highs and 73 new lows.

Wall St rallies as data, RBA move lifts hope of Fed easing
 

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Comments (17)
Joe Rizzuto
Joe Rizzuto Oct 05, 2022 8:06AM ET
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Dennis ****said... "I do think this earnings season is going to not be good" ... that 7s a stupid way of saying, earnings are gonna be bad.
Dave Jones
Dave Jones Oct 05, 2022 3:11AM ET
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Jerome has to put on the big boy trousers and say there ain't any pivot! Otherwise it shows how weak it is and the fed really will be a laughing stock.
Joe Rizzuto
Joe Rizzuto Oct 05, 2022 3:11AM ET
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fed is already a laughing stock. being even more stupid does not make it stronger.
perplexed76 .
perplexed76 . Oct 04, 2022 11:33PM ET
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gamblers miss cheap money to make everything way too expensive further. Kick'em out, Jerome
Stephen Fa
Stephen Fa Oct 04, 2022 9:38PM ET
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Hope is not a good strategy
William Bailey
William Bailey Oct 04, 2022 7:50PM ET
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Pivot sucker rush in … media lies so much about money
Tom Michaels
Tom Michaels Oct 04, 2022 4:25PM ET
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Beware, this is just part of the mega manipulation scam. Tomorrow will be the second part of the dead cat bounce.
Chad Richer Than You
Chad Richer Than You Oct 04, 2022 4:25PM ET
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This guy sold shirt shorting the bottom
Izaak Salman
BondBonds Oct 04, 2022 1:49PM ET
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Cutting oil and energy will force economy down. Enjoy with short Green Day.
Stephen Fa
Stephen Fa Oct 04, 2022 1:26PM ET
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1 weak of slowing economic data does not yet make a trend or confirm an inflation peak
Chad Richer Than You
Chad Richer Than You Oct 04, 2022 12:42PM ET
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As Chad & Co roasts the shorts ♨️♨️
TheEnd IsNigh
TheEnd IsNigh Oct 04, 2022 12:36PM ET
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Bottom is in. Blue wave in November. Ukraine nukes Russia. American diet becomes "butter boards" sprinkled with insect parts. Bangladeshis go back to using fire as a light source. The future is bright my friends!
Show previous replies (1)
TheEnd IsNigh
TheEnd IsNigh Oct 04, 2022 12:36PM ET
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Ah...but they will be when the elite become concerned about the rise of discontent in the general population. Gotta keep the little people brain dead and entertained, otherwise you risk an uprising.
Pc Kc
Pc Kc Oct 04, 2022 12:36PM ET
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TheEnd IsNigh finally someone gets it
First Last
First Last Oct 04, 2022 12:36PM ET
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"Ukraine nukes Russia"  -- You got that reversed.
Bill Powers
Bill Powers Oct 04, 2022 12:36PM ET
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you don't understand satire or sarcasm at all.
James Wills
James Wills Oct 04, 2022 12:36PM ET
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go away Peace of crap.
 
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