The S&P 500 rose on Wednesday as Wall Street attempted to end a three-day losing streak and end August on a high.
The broad market index climbed 0.2%, trying to find its way back to the 4,000 level after falling below it for the first time since July in the previous session. The Nasdaq Composite gained 1.1% while the Dow Jones Industrial Average fluctuated above the zero line.
All major averages are on track to end the month roughly 3% lower.
PayPal’s shares rose about 5% after Bank of America upgraded the stock, and said Elliott management will likely push for more changes at the company that would boost earnings. Netflix shares also rose 5% after social media company Snap lost two key executives to the streaming service.
Markets have been heavily sold-off since Friday following aggressive comments from US Federal Reserve Chair Jerome Powell. Most recently, Cleveland Fed President Loretta Mester said she sees interest rates rising to over 4% by early next year, while New York Fed President John Williams called for “somewhat hawkish policy to slow demand.”
Still, some investors are hoping that the Fed will turn less hawkish and that this will support a strong fourth quarter finish for equities.
“Certainly not reserved, but less hawkish,” Kevin Mahn, chief investment officer at Hennion & Walsh Asset Management, told CNBC’s “Squawk Box” on Wednesday. “A fixed rate of 75 basis points – that was all in place for September. They don’t mean October and I believe they will come back in November and December and only raise 25 basis points on each of those two sessions. “
Wall Street’s sell-off began on Tuesday, with the Dow Jones Industrial Average down almost 1%. The Nasdaq Composite fell 1.1% and the S&P 500 fell 1.1%, falling below 4,000 for the first time since late July. All major averages were poised to end August with losses.
“This volatility is really healthy and constructive,” Jeff Kilburg, Sanctuary Wealth’s chief investment officer, told CNBC. “It doesn’t feel good, and the speed the Fed has brought to this de-risking process has taken many investors’ breath away, but … There are many signs that are more optimistic than negative” — like the rise in yields for government bonds, he said.
“For the market to go from 3,600 to 4,300 in 19 trading sessions is not sustainable,” he added. “Seeing the market come back and the S&P 500 fill volume at around 4,000 is really constructive and allows us to have a foundation in light of better than expected earnings season and slowly improving consumer sentiment goes up another notch.”
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