Stocks rise on Wall Street, erasing most weekly losses
Stocks rose broadly on Wall Street today and erased weekly losses for most of the major indexes.
The gains follow Wednesday’s bump higher after the Federal Reserve signaled it may begin easing its extraordinary support measures for the economy later this year.
The S&P 500 index rose 1.4 percent as of 12:45 p.m. The Dow Jones Industrial Average rose 557 points, or 1.6 percent, to 34,815 and the Nasdaq rose 1 percent.
Nearly every stock in the benchmark S&P 500 rose. It’s now up 0.5 percent for the week and has recovered from a from a sharp sell-off on Monday. The turnaround is more pronounced within the Dow, which is now up 0.7 percent for the week after having been down 1.9 percent for the week as of Tuesday.
The change in investor sentiment has also put oil prices in the green. Benchmark U.S. crude oil is now up 1 percent for the week owing to a 1.6 percent gain today. Bond yields moved solidly higher. The yield on the 10-year Treasury rose to 1.40 percent from 1.32 percent late Wednesday.
Technology companies and banks led the way higher. Cloud-based software company Salesforce.com was a standout with a 6.3 percent gain after raising its sales forecast for the year. Citigroup rose 4.3 percent.
Small-company stocks, which are typically a good measure of investor confidence for economic growth, also jumped over to the winning column. The Russell 2000 is up 1.5 percent for the day and 0.7 percent for the week.
Other standouts included Olive Garden owner Darden Restaurants. Its stock jumped 6.3 percent after delivering strong quarterly results.
Investors got some reassuring news out of China, where Evergrande, one of the country’s biggest private real estate developers, said it will make a payment due today on a domestic bond. Concerns about the potential for a default jarred global markets earlier in the week.
European and Asian markets rose.
The Federal Reserve on Wednesday indicated it may start raising its benchmark interest rate sometime next year, earlier than it envisioned three months ago. It also said it will likely begin slowing the pace of its monthly bond purchases “soon” if the economy keeps improving. The Fed and other central banks have been buying bonds throughout the pandemic to help keep long-term interest rates low.
“The reality is that the Fed is going to err on side of not tightening anything on inflation until they absolutely have to,” said Brent Schutte, chief investment strategist, Northwestern Mutual Wealth Management Company. “They are going to stick around as long as they possibly can.”
The central bank has been closely watching job growth to get a better gauge of the economic recovery. The jobs market has seen a choppy recovery amid a resurgence of COVID-19 with the highly contagious delta variant. The Labor Department’s latest update shows that the number of Americans applying for unemployment aid rose last week for a second straight week to 351,000.
Markets have had a rough September and investors could be in for more choppiness as they work through a mix of concerns, Schutte said. That includes COVID-19 and its lingering impact on the economy, along with a slow recovery for the employment market and the Fed’s position on support.
“People got so used to a one-way market,” he said. “It’s going to be more of two-way market and investors need to get used that, but I still think the trend is higher.”