Dow jumps 200 points on Wednesday, Nasdaq tries to snap 7-day losing streak
Stocks rose on Wednesday – trying to shake off a three-week decline – as rates and oil prices eased, easing investor concerns about continued high inflation.
The Dow Jones Industrial Average gained 234 points, or 0.75%. The S&P 500 rose 0.91% and the Nasdaq Composite rose 1.07%, trying to break a seven-day losing streak.
US Treasury yields fell after jumping on Tuesday. Oil prices fell, with West Texas Intermediate crude plunging below $85 a barrel. The pound sterling has hit its lowest level against the dollar since 1985.
The upward moves reversed an earlier plunge into negative territory in futures trading. Stock futures fell after a Suggested Wall Street Journal article that Federal Reserve Chairman Jerome Powell’s pledge to reduce inflation could mean that the central bank raises rates by 0.75 percentage points in September, which would be the third consecutive increase of this magnitude.
On Wednesday, the Federal Reserve will deliver its summary of current economic conditions, also known as beige book. Elsewhere, Fed Chairs Loretta Mester of Cleveland and Tom Barkin of Richmond, as well as Fed Vice Chair Lael Brainard, are expected to speak at various events.
Markets had been hoping the Fed would start granting more modest increases from September, but are now pricing in an 86% chance of a 0.75 percentage point hike.
Stocks have struggled recently as Treasury yields trade around their highest levels since June. Moreover, September has always been the most difficult month for the market. All eyes are on the 3,900 level of the S&P 500. Some see the index falling to even lower lows, while others are bullish on a year-end rally.
“With equities back to June lows and the rate path reset, further inflation easing as well as decisive EU government intervention to tackle the energy crisis could cause a further compression of the decline,” Barclays’ Emmanuel Cau wrote in a Wednesday note. “Overview, we think equities remain in a tough spot given a poor growth-policy trade-off.”