US Stocks Rise in Extended Rally 10/04 15:54
The Dow Jones Industrial Average climbed more than 800 points and the S&P
500 had its best day in more than two years Tuesday as the market clawed back
more of the ground it lost in a miserable several weeks on Wall Street.
(AP) -- The Dow Jones Industrial Average climbed more than 800 points and
the S&P 500 had its best day in more than two years Tuesday as the market
clawed back more of the ground it lost in a miserable several weeks on Wall
The S&P 500 rose 3.1%, its best day since May 2020, as all but five of the
stocks in the index notched gains. The benchmark index has been rallying since
hitting its lowest point of the year on Friday to close out a September slump.
Twitter surged 22.2% after Elon Musk said he would go ahead with his $44
billion acquisition of the social media company, abandoning months of efforts
to get out of the deal.
The Dow rose 2.8% and the Nasdaq composite climbed 3.3%. Small company
stocks also made solid gains, lifting the Russell 2000 3.9% higher. European
and Asian markets also rose broadly.
The market's gains come as major indexes remain in a bear market after
falling 20% or more from their most recent record highs. The two-day rally is
hitting markets as investors look for signs that central banks might ease up on
their aggressive rate hikes aimed at taming the hottest inflation in four
Australia's central bank made an interest rate hike that was smaller than
previous ones and that helped Australia's market jump 3.8%. It is a potentially
positive signal for investors, along with the latest jobs data from the U.S.
Investors in the U.S. received potentially encouraging news from a
government report on job openings that showed the number of available jobs in
the U.S. plummeted in August compared with July. It's a sign that businesses
may pull back further on hiring and potentially cool chronically high inflation.
The optimism could be misguided as inflation remains stubbornly hot, said
John Lynch, chief investment officer for Comerica Wealth Management.
"Investors should be worried about false positives," he said. "Be wary of
the history of bear market rallies, they can be very seductive."
Major indexes could be in store for more declines ahead, he said, as more
economic data and the next round of earnings reports paints a clearer picture
of how inflation continues to impact business operations and consumer spending.
The S&P 500 rose 112.50 points to 3,790.93, while the Dow gained 825.43
points to close at 30,316.32. The Nasdaq rose 360.97 points to 11,176.41 and
the Russell 2000 added 66.90 points at 1,775.77.
Treasury yields continued to pull back from their multiyear highs, which has
helped relieve some of the pressure on stocks. The yield on the 10-year
Treasury, which helps set rates for mortgages and many other kinds of loans,
slipped to 3.64% from 3.65% late Monday. It got as high as 4% last week after
starting the year at just 1.51%.
The yield on the two-year Treasury, which more closely tracks expectations
for Federal Reserve action, fell to 4.10% from 4.12% late Monday.
The market was mostly quiet with company news ahead of the next round of
Cruise line operators were among the biggest gainers in the S&P 500.
Norwegian Cruise Line jumped 16.8%, Royal Caribbean surged 16.7% and Carnival
Investors are watching closely as central banks raise interest rates to make
borrowing more difficult and slow economic growth to try to tame inflation.
Investors are hoping that they will eventually ease off their aggressive rate
hikes and the move by Australia's central bank is a hopeful sign for some.
Wall Street is worried that the rate hikes, especially the increases from
the Fed, could go too far in slowing growth and send economies into a
recession. The Fed has already pushed its key overnight interest rate to a
range of 3% to 3.25%, up from virtually zero as recently as March.
Economic growth is already slowing globally and the U.S. economy contracted
during the first two quarters of the year, which is considered an informal
signal of a recession. The economy still has several strong pockets, including
Wall Street will get a more detailed look at the employment situation in the
U.S. this week, with a report on hiring by private companies due out Wednesday,
the latest tally of weekly applications for unemployment benefits on Thursday
and the government's monthly jobs report for September on Friday.
If those reports point to a still strong job market, that could trigger a
bond market sell-off, which would weigh on stocks, said Jay Hatfield, CEO of
Infrastructure Capital Advisors.
"All those could hit the stock market because right now the bond market is
really driving the stock market," he said.