US Stocks Rally; Erase Losses for Week 09/23 16:30
Stocks on Wall Street rallied for the second straight day Thursday and have
now reversed the market's sharp pullback at the start of the week.
(AP) -- Stocks on Wall Street rallied for the second straight day Thursday
and have now reversed the market's sharp pullback at the start of the week.
The S&P 500 rose 1.2%, with more than 85% of companies in the benchmark
index notching gains. The Dow Jones Industrial Average gained 1.5% and the
Nasdaq rose 1%.
The rally put the major indexes on pace for weekly gains just four days
after a broad sell-off handed the S&P 500 its biggest skid since May and
knocked the Dow more than 600 points lower.
The market's sharp swing from Monday, when the S&P 500 slumped 1.7%, to
Thursday, when it closed with 0.4% gain for the week, reflects how quickly
investor sentiment can change, and is another example of how in a market that's
near all-time highs, traders tend to see waves of selling as buying
Monday's sell-off was triggered by concerns about the potential for a
default by Evergrande, a huge, debt-laden private Chinese real estate
developer. Traders also were feeling uneasy about how quickly the Federal
Reserve might elect to rein in some of the support measures it's been giving
the markets and economy.
Those worries were allayed by Wednesday, when the Federal Reserve signaled
it wouldn't begin considering such a tapering of support before at least
November, and indicated it may start raising its benchmark interest rate
sometime next year. Investors also got reassuring news out of China, where
Evergrande said it would make a payment due Thursday on a domestic bond.
"The last few days have just been this recognition that all the things that
were being talked about, the market has shrugged them off," said Michael
Antonelli, managing director and market strategist at Baird, noting that the
S&P 500 is only about 1.5% below its all-time high set earlier this month.
"The market was just ripe for a sell-off," on Monday, Antonelli said. "We
still have not had a 5% pullback from the highs yet this year."
After its two-day policy meeting concluded Wednesday, the Fed 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."
Still, 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.
"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
The change in investor sentiment has also put oil prices in the green.
Benchmark U.S. crude oil is now up 1.2% for the week.
Bond yields moved solidly higher. The yield on the 10-year Treasury rose to
1.43% from 1.32% late Wednesday, a big move.
All told, the S&P 500 index rose 53.34 points to 4,448.98. The Dow gained
506.50 points to 34,764.82, while the Nasdaq rose 155.40 points to 15,052.24.
Technology companies and banks led the way higher Thursday. Cloud-based
software company Salesforce.com was a standout with a 7.2% gain after raising
its sales forecast for the year. Citigroup rose 3.9%.
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 rose 40.48 points, or 1.8%, to 2,259.04. It's up 1% for the week.
Other standouts included Olive Garden owner Darden Restaurants. Its stock
jumped 6.1% after delivering strong quarterly results.
European and Asian markets rose.