Stocks rose on Wednesday – trying to shake off a three-week slide – as rates and oil prices eased, curbing investor concerns about continued high inflation.
The Dow Jones Industrial Average gained 245 points, or 0.8%. The S&P 500 rose 0.89% and the Nasdaq Composite rose 0.93%, trying to snap a seven-day losing streak.
US Treasury yields fell after a jump on Tuesday. Oil prices fell, with West Texas Intermediate crude oil falling below $85 a barrel. The British pound has hit its lowest level against the dollar since 1985.
Higher moves reversed an earlier dip into negative territory in futures trading. Stock futures fell after a Wall Street Journal article suggested that Federal Reserve Chairman Jerome Powell’s commitment to lower inflation could mean the central bank raises rates by 0.75 percentage points in September, which would be the third straight rate hike. that size.
On Wednesday, the Federal Reserve will release its summary of current economic conditions, also known as the Beige Book. Elsewhere, Fed Presidents Loretta Mester of Cleveland and Tom Barkin of Richmond, as well as Fed Vice Chairman Lael Brainard, are scheduled to speak at various events.
Markets have been hoping the Fed will start delivering smaller hikes starting in September, but are now pricing in an 86% chance of a 0.75 percentage point hike.
Stocks have suffered recently as Treasury yields trade around their highest levels since June. Additionally, September has historically been the most difficult month for the market. All eyes are on the 3,900 level on the S&P 500. Some see the index falling to even lower levels, while others are optimistic about a year-end rally.
“With stocks returning to June lows and the pace of rates reset higher, more inflation easing along with decisive EU government intervention to tackle the energy crisis could prompt another bear squeeze ,” Barclays’ Emmanuel Cau wrote in a note on Wednesday. “Big picture, we think stocks remain in a tough spot given a weak growth policy tradeoff.”
