Wall Street stocks are higher as markets open the month, trying to shake off a miserable September marred by fears that the US Federal Reserve’s aggressive rate hikes would plunge the US economy into recession. US Treasury yields have declined from their multi-year highs, indicating investor confidence in the economy.
The S&P 500 was up 70 points, or nearly 2%, to 3,655 at 11:25 a.m. Eastern time. The Dow rose 614 points, or 2.1%, to 29,375, while the Nasdaq gained 1.4%.
“[T]There are so many moving macro parts in the world here that it’s easy to get confused. US equity investors should focus on what matters most: yields, inflation and growth,” Vital Knowledge analyst Adam Crisafulli said in a research note.
Lowest level in almost 2 years
In September, the S&P 500 plunged into its worst month since the coronavirus pandemic took global markets down. It starts October at its lowest level since November 2020, down more than a quarter year-to-date.
The Fed is at the forefront of the global campaign to slow economic growth and harm labor markets just enough to undercut inflation, but not so much that it causes a recession. On Friday, the Fed’s preferred measure of inflation showed it was worse than economists had expected for the past month. That should keep the Fed on course to keep raising rates and keep them high for a while, increasing the risk that they will go too far and cause a downturn.
The pound strengthened and the cost of borrowing for the UK government fell after Prime Minister Liz Truss’ new, embattled government abandoned austerity plans Income tax rates for top earners, part of a package of unfunded cuts that had caused turmoil in financial markets and sent the pound to record lows. in one dramatic turnaroundFinance chief Kwasi Kwarteng abandoned plans to abolish the top rate of 45% income tax paid on earnings over £150,000 ($167,000) a year.
The U.S. dollar’s stunning and rapid rise against other currencies increases the risk of creating enough stress to cause a collapse somewhere in global markets.
European energy concerns
Europe is ahead “Unprecedented risksto forgo its natural gas supplies this winter after Russia halted most pipeline supplies and could end up competing with Asia for already scarce and expensive liquefied natural gas, which is delivered by ship, the IEA said.
Reports that major oil producers are planning further production cuts also put upward pressure on energy prices. Crude oil prices rose sharply ahead of an OPEC+ meeting this week. The oil cartel is expected to announce production cuts.
U.S. benchmark crude rose $3.39 to $82.88 a barrel in electronic trading on the New York Mercantile Exchange. On Friday, it lost $1.74 to $79.49 a barrel.
Brent crude, the standard for international oil prices, rose $3.33 to $88.47 a barrel.
OPEC and allied oil-producing countries, including Russia, slightly cut supplies to the global economy a month ago, underscoring their dissatisfaction as recession fears help push down crude prices.
On Fridaythe S&P 500 fell 1.5%, the Dow Jones Industrial Average fell 1.7% and the Nasdaq Composite fell 1.5%. All three are down nearly 3% last week as the Dow slipped into what is considered bear territory and down more than 20% for the year.
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