Charlie Brooks
Sep 09, 2022 10:33
Thursday's gains in the major Wall Street indexes were the result of investors digesting hawkish comments from government officials, which strengthened expectations for a significant interest rate hike later this month. The advances were mostly driven by financial firms and healthcare companies.
Concerns regarding the Federal Reserve's future steps to combat inflation led to choppy trading conditions.
Grace Lee, senior portfolio manager for equity income at Boston-based Columbia Threadneedle Investments, stated, "There is just a great deal of uncertainty, and I don't believe people will make a decision for more than five minutes or five seconds until there is a little more clarity or light at the end of the tunnel."
87% of money market traders believe that the Fed will raise rates by 75 basis points at its meeting this month.
Bank of America (NYSE:BAC), Barclays (LON:BARC), and Jefferies have said that they now predict a 75 basis point increase in interest rates. Bank of America and Jefferies expected a 50-basis point increase prior to Barclays' prediction of a 50- or 75-basis point hike. Jerome Powell, chairman of the Federal Reserve, indicated that the central bank is "totally committed" to controlling inflation and must endure until the objective is achieved. Charles Evans, president of the Federal Reserve Bank of Chicago, concurred with his fellow policymakers that containing inflation is "task one." Furthermore, investors anticipate the U.S. inflation report for August the following week for fresh indications as to whether the Federal Reserve will raise interest rates by a half percentage point or three-quarters of a percentage point at its next policy meeting on September 20-21.
Concerns over aggressive global monetary tightening froze equity markets on Thursday, as the European Central Bank raised interest rates by a record 75 basis points and forecasted further increases. The number of Americans filing new claims for unemployment benefits reached a three-month low last week, demonstrating the durability of the labor market despite the Federal Reserve's interest rate increases. The rate-sensitive S&P 500 bank index and the rate-sensitive S&P 500 healthcare sector both climbed by 2.8% and 1.8%, respectively, as the probability of another excessive rate increase grew. The announcement that Regeneron Pharmaceuticals Inc (NASDAQ:REGNanti-blindnessEylea )'s treatment was equally effective when provided at a higher dose and with a longer interval between injections boosted the healthcare sector. The stock of the corporation surged 18.8%.
Similar to the broader financial sector, healthcare is an extremely secure and still relatively affordable industry, according to Lee. To hit 31,774, the Dow Jones Industrial Average increased 193.24 points, or 0.61 percent. The S&P 500 rose 26.31 points, or 0.66 percent, to 4,006.18 and the Nasdaq Composite advanced 70.23 points, or 0.61 percent, to 11,863. The stock of GameStop Corp (NYSE:GME) increased by 7.4% after the video game retailer reported a quarterly loss that was smaller than expected. American Eagle Outfitters (NYSE:AEO) slumped 8.7% after the apparel maker missed second-quarter earnings estimates and announced it will stop its quarterly dividend to protect its finances from inflation.
The volume on U.S. exchanges was 10.19 billion shares, compared to the 20-day daily average of 10.37 billion shares.
On Wednesday, the major indexes on Wall Street climbed the most in about a month, as bond yields dipped after a recent rally fuelled by expectations of higher interest rates. Despite this, the S&P 500 is down over 16% so far this year.
On the NYSE, rising stocks outnumbered falling ones 1.34 to 1; on the Nasdaq, the ratio was 1.48 to 1.
Seven new 52-week highs and eight new lows were recorded for the S&P 500, while the Nasdaq Composite recorded thirty-seven new highs and one hundred fifty-three new lows.
Sep 09, 2022 10:32