Stocks charge higher on Wall Street, erasing weekly losses
Stock indexes on Wall Street closed solidly higher Wednesday, placing the market on pace to break a three-week losing streak.
The Standard & Poor’s 500 rose 1.8% on Wednesday, its biggest single-day gain in four weeks, with roughly 95% of the stocks in the benchmark index closing higher.
The Dow Jones industrial average rose 1.4%, and the tech-heavy Nasdaq composite climbed 2.1%. Smaller-company stocks outgained the broader market, driving the Russell 2000 index 2.2% higher.
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The indexes are now all in the green for the week, a welcome respite for traders after a slump in recent weeks that erased much of the market’s gains from a July and early August rally.
Wall Street watchers cautioned that the market is likely to see more volatility in coming weeks ahead of the next Federal Reserve interest rate policy update scheduled for Sept. 21.
“It’s good that there’s an up day, but I would caution anyone not to be too optimistic right now,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab. “You don’t have a whole lot of reason for that.”
Stocks have been mostly losing ground in recent weeks after the Federal Reserve indicated it will not let up anytime soon on raising interest rates to bring down the highest inflation in decades.
Wall Street’s focus remains on inflation and the Fed’s attempt to rein it in with high interest rates. The central bank has already raised rates four times this year, and markets expect its policymakers to deliver another jumbo-sized increase of three-quarters of a percentage point at their next meeting in two weeks.
The central bank has been clear about its determination to continue raising rates until it feels that inflation is leveling off or cooling. In June, Fed officials projected that the benchmark rate will reach a range of 3.25% to 3.5% by year’s end and roughly a half-percentage point more in 2023.
“We are in this for as long as it takes to get inflation down,” Fed Vice Chair Lael Brainard said at a banking industry conference Wednesday. “Our resolve is firm, our goals are clear, and our tools are up to the task.”
Investors have been reviewing economic data to gauge whether price increases on food, clothing, gas and many other goods are easing. They are also closely listening for any clues about potential changes in policy from Fed officials.
Traders clawed back some of their recent losses with Wednesday’s rally, which pushed the S&P 500 up 71.68 points to 3,979.87. The Dow rose 435.98 points to 31,581.28, and the Nasdaq gained 246.99 points to close at 11,791.90.
The Russell 2000 climbed 39.68 points to 1,832.
Technology and retail stocks made solid gains. Intuit rose 3.9%. Target rose 4.4% after announcing that it is dropping the mandatory retirement age for its chief executive position, allowing CEO Brian Cornell to stay on for three more years.
United Airlines rose 5.5% after raising its revenue forecast after a busy summer travel season. The encouraging update helped several competitors take flight. American Airlines gained 5.1% and Delta Air Lines added 3.3%.
Energy stocks fell broadly as U.S. crude oil prices slid 5.7%. Chevron fell 1.3%.
Bond yields fell. The yield on the 10-year Treasury, which influences interest rates on mortgages and other loans, fell to 3.27% from 3.34% late Tuesday. The two-year Treasury yield, which tends to track expectations for Fed action, fell to 3.45% from 3.51%.
Markets in Europe closed mostly higher, while those in Asia ended mostly lower.
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