Energy stocks follow oil’s decline The Fed’s Beige Book said price pressures persisted Fed Chairman Powell will speak on Thursday Up 1.4%, S&P 500 up 1.84%, Nasdaq up 2.14%
Sept 7 (Reuters) – U.S. stock indexes rose the most in about a month as bond yields fell as investors shunned hawkish statements from Federal Reserve officials on Wednesday. The last time the Nasdaq Composite (.IXIC), S&P 500 (.SPX) and Dow Jones Industrial Average (.DJI) posted a higher daily jump was on Aug. 10, though investors doubt this is a long-term trend. The tech-heavy Nasdaq led gains among the major indexes, snapping a seven-session losing streak. Sign up now for FREE unlimited access to Reuters.comSign up US stocks have sold off sharply since mid-August after Fed Chairman Jerome Powell’s hawkish comments were exacerbated by signs of an economic slowdown in Europe and China and aggressive moves by major central banks to tame inflation. The strength of data signaling on the US economy prompted investors to bet on a 75 basis point rate hike by the Fed later this month. Fed mutual fund futures implied that investors were pricing in more than a 76% chance of such a move. High-growth companies such as those in the technology sector tend to benefit when yields fall, as it means a lower discount rate on their future earnings when investors calculate valuations. But investors are looking for more external signs of how the Federal Reserve’s interest rate hikes will play out to tame rising inflation ahead of its next meeting later this month. “Bond markets are behaving a little better today, which gives the stock market a little better sentiment, but the big concerns are still what the Fed is going to do on September 21st. So we see a back and forth tug of war every day,” said Brent Schutte, Chief Investment Officer of Northwestern Mutual Wealth Management Company. The stock performance also ignored hawkish comments from the Federal Reserve earlier on Wednesday. Cleveland Federal Reserve Bank President Loretta Mester said the high cost of U.S. rental housing has not yet fully passed through inflation measures, suggesting inflation may rise further. read more Meanwhile, Richmond Fed President Thomas Barkin said the U.S. central bank should raise interest rates to a level that curbs economic activity and keep them there until policymakers are “convinced” that inflation is easing , while Federal Reserve Vice Chair Lael Brainard added that monetary policy should be tight “for some time.” The main focus will be Powell’s speech on Thursday and US 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, showed price pressures are expected to persist at least through the end of the year. The Dow Jones Industrial Average (.DJI) rose 435.98 points, or 1.4%, to 31,581.28, the S&P 500 (.SPX) gained 71.68 points, or 1.83%, to 3,979.87 and the Nasdaq IX)9 added (2 units). 2.14%, to 11,791.90. Ten of the S&P’s 11 major sectors were trading higher, leading utilities (.SPLRCU) higher, reflecting investors’ defensive stance amid economic uncertainties. The energy index (.SPNY) fell 1.16% as oil prices fell about 5% on demand concerns linked to looming recession risks. Brent crude fell below $90 a barrel. read more Nio Inc reversed earlier losses to end the session up 2.16 percent after the Chinese electric vehicle maker reported a wider adjusted net loss in the second quarter, but revenue beat expectations. Coupa Software Inc ( COUP.O ) jumped nearly 18% after the payments management software company beat second-quarter estimates for revenue and profit. Volume in US stocks was 10.21 billion shares, compared to the 10.43 billion average for the full session over the past 20 trading days. Advancing issues outnumbered declining ones on the NYSE by a ratio of 3.07 to 1. On the Nasdaq, a ratio of 2.60 to 1 favored the advancers. The S&P 500 hit 6 new 52-week highs and 16 new lows. the Nasdaq Composite recorded 24 new highs and 231 new lows. Sign up now for FREE unlimited access to Reuters.comSign up Reporting by Carolina Mandl in New York, with additional reporting by Sruthi Shankar and Ankika Biswas in Bengaluru. Editing by Anil D’Silva, Maju Samuel, Shounak Dasgupta and Aurora Ellis Our Standards: The Thomson Reuters Trust Principles.
