NEW YORK (`) — Wall Street rose Thursday, paring its sharp September loss after pressure on oil and bond markets eased somewhat.
The S&P 500 rose 25.19, or 0.6%, to 4,299.70. The Dow Jones Industrial Average gained 116.07 points, or 0.3%, to 33,666.34, and the Nasdaq Composite gained 108.43, or 0.8%, to 13,201.28.
A drop in oil prices caused some excitement in the stock market, a day after crude oil hit its highest price of the year. Treasury yields also fell to give the stock market, particularly Big Tech companies, more breathing room.
A 2.1% rise for Meta Platforms and a 1.5% rise for Nvidia were two of the strongest forces lifting the S&P 500.
However, stock markets are still on track to have their worst month of the year as Wall Street grapples with a new normal in which interest rates may remain high for a while. Hoping to curb high inflation, the Federal Reserve raised its key interest rate to its highest level since 2001 Last week it was suggested that there could be a reduction Interest rates will be lower next year than originally expected.
For investors who relied on the Fed to cut interest rates quickly and sharply when things looked dicey, this represents a stark departure from previous years. Lower interest rates can roil financial markets, while high interest rates can disrupt the economy inherently slowing down and affecting the prices of stocks and other investments.
The threat of prolonged higher interest rates has driven up government bond yields in the bond market. The yield on the 10-year Treasury note climbed above 4.67% in the morning, nearing its highest level since 2007. It later fell back to 4.57%, compared with 4.61% late Wednesday.
The two-year Treasury yield, which is more closely aligned with expectations of Fed action, fell to 5.06% from 5.14%.
Yields fluctuated following the latest economic reports.
One said Fewer workers filed for unemployment benefits last week than economists expected. It’s the latest signal of a solid labor market that has helped stave off a recession but may also put upward pressure on inflation.
A separate report said The US economy grew by 2.1% annually in the summer, according to some revisions to previous estimates. That was below economists’ expectations, but economic growth appears to have remained solid, at least in the third quarter. The question is how things will develop in the last three months of the year.
Overall, the reports have done nothing to change investors’ minds about the Fed’s continued tight interest rate policy, what Wall Street calls a “hawkish” stance on monetary policy.
“The wait continues,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office.
“Until there is a clear breakout of this holding pattern, investors will live with a hawkish Fed, longer-term higher interest rates and likely additional market volatility,” he said.
In addition to the risk of prolonged higher interest rates, the economy and Wall Street face many other challenges.
The most immediate is the danger of another government shutdown in the USA already this weekend, although financial markets have held up quite well during the past closures.
Another threat eased somewhat as crude oil prices declined. A barrel of US crude oil fell by $1.97 to trade at $91.71. It is still up sharply from under $70 in the summer, adding to inflation concerns. Brent crude, the international standard, also fell by more than $1 a barrel.
On Wall Street, Peloton Interactive rose 5.4%, followed by the online exercise bike and fitness company announced a five-year partnership with sportswear manufacturer Lululemon Athletica.
Trimble rose 6.5% after announcing it will receive $2 billion in cash and a 15% stake in a joint venture with farm equipment maker AGCO. Trimble will contribute a majority of its precision agriculture business to the joint venture. AGCO rose 2.8%.
On Wall Street’s loser side, Micron Technology slumped 4.4% despite its latest quarter results coming in better than analysts expected. Its forecast for upcoming profitability fell short of some analysts’ estimates.
In overseas stock markets, Hang Seng fell 1.4% in Hong Kong trading Shares in real estate developer China Evergrande Group have been suspended. The company said authorities had informed it that its chief executive Hui Ka Yan had been subjected to “compulsory measures in accordance with the law on suspicion of illegal crimes.”
Evergrande is the world’s most indebted real estate developer and is at the center of a real estate market crisis that is slowing China’s economic growth.
___
` business reporters Yuri Kageyama and Matt Ott contributed.
Comments are closed.