U.S. stocks rose on Wednesday after several retailers offered investors some optimism about this year’s sales, and the release of minutes from the Federal Reserve’s latest meeting signaled little change in the central bank’s plan to fight inflation.
After a brief opening down, stock indices turned green at the beginning of trading. The performance rose after 14:00 ET, when minutes were released on the Fed earlier this month.
The S&P 500 rose 37.25 points, or 0.9%, to 3,978.73. Nasdaq Composite rose 170.29 points, or 1.5%, to 11,434.74, a reversal from a sharp sell-off in technology stocks the day before. The Dow Jones Industrial Average rose for the fourth consecutive trading day, adding 191.66 points, or 0.6%, to 32,120.28.
Shares of consumer opinion rose on the S&P 500, rising 3.4%. Several retail companies, including Nordstrom and Express, have raised their forecasts for 2022, while others, such as Dick’s Sporting Goods, have said the business is not deteriorating. The brighter outlook offered investors a welcome change from last week, when Target and Walmart reported disappointing results.
“Some investors were expecting Armageddon at retail,” said Matt Perón, director of research at Janus Henderson Investors. “The story was that it could be another week with bruises. Now the market is relieved around the consumer sector. ”
The stocks had an unequal start to the week, amid concerns over a tightening of the Fed’s monetary policy to fight high inflation and how much a slowdown it could cause. The S&P 500 fell 17 percent from its last record in January and briefly fell in the bear market last Friday before cutting losses.
“It was very unstable, to say the least. This has to do with the question of whether the recession is coming or not. That’s really what the market is pushing and pulling between them, “said Fahad Kamal, chief investment officer at Kleinwort Hambros.
Minutes of the Fed’s May 3-4 meeting, released on Wednesday, show officials have discussed raising interest rates to levels high enough to deliberately slow economic growth as the central bank struggles to fight high inflation. . US durable goods orders rose 0.4% in April, slower than economists expected.
The Fed’s protocols offered few, if any, surprises for employees’ thinking, said Philip Toess, CEO of Toews Asset Management. Wednesday’s rally, which gained momentum throughout the afternoon, may reflect more than anything the sentiment that many stocks have already fallen enough – at least for now. “I think we can be in a light bear market here,” he said.
Stocks enter a bear market when an index like the S&P 500 falls at least 20% from a recent high. On Friday, this indicator was close to the end of the bear market before the rally in the late session.
Shares fell in 2022 as investors adjusted to rising consumer prices and the Fed’s response. As interest rates rose and the outlook for the economy dimmed, the shares of many companies seemed increasingly expensive, at least compared to their profits, said Sean O’Hara, president of Pacer ETFs Distributors.
“When one climbs,” Mr. O’Hara said, “the other has to go down.”
The yield on the benchmark 10-year government securities fell to 2.766% from 2.758% on Tuesday. It has decreased for five of the last six trading sessions. Yields fall when prices rise.
“The market appreciates the slowdown that will eventually come from the Fed’s tightening. He also predicts that inflation in 2023 will slow to much more reasonable levels, “said Antonio Cavarero, head of investment at Generali Insurance Asset Management.
Government debt tends to perform well during slower economic growth, which has led to a stabilization of the bond market in recent days.
When markets turn down, some investors try to profit by using a strategy known as buying down. Ganjan Banerjee of WSJ tells us why this approach is risky in today’s volatile market, although it can be tempting. Illustration: Reshad Malekzai
Oil prices rose with global benchmark crude oil Brent, rising 47 cents, or 0.4 percent, to $ 114.03 a barrel. The US energy minister said the Biden administration had not ruled out a ban on oil exports to curb domestic fuel prices, Reuters reported.
On individual stocks, Snap shares rose $ 1.37, or 11 percent, to $ 14.16. Shares of Snapchat fell 43% on Tuesday after issuing a profit warning, citing macroeconomic conditions that deteriorated faster and further than expected.
“It is clear that there has been a reassessment of the technical assessments. It is impossible to know how far we are going, but some of them are quality businesses and significantly cheaper than they have been trading lately, “said Mr Kamal. “If you’re a long-term investor, that’s going to be something of interest.”
Retailer Nordstrom rose $ 2.90, or 14 percent, to $ 23.58 after raising its year-round revenue growth guidelines. Clothing company Express jumped 16 cents, or 6.7 percent, to $ 2.54 after posting less-than-expected loss and raising sales guidelines. Dick’s rose $ 6.90, or 9.7%, to $ 78.14.
Toll Brothers ‘housing construction rose $ 3.55, or about 8 percent, to $ 48.09 after reporting revenue and profits that exceeded analysts’ expectations.
The technology-focused Nasdaq Composite closed about 2.3% on Tuesday.
Photo: Justin Lane / Shutterstock
Abroad, the Pan-Continental Stoxx Europe 600 rose 0.6%.
In Asia, key indicators were mixed. The Shanghai Composite Index added 1.2%, while Hang Seng in Hong Kong scored 0.3%. The Japanese Nikkei 225 fell 0.3%.
-Ryan December contributed to this article.
Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and to Justin Baer at justin.baer@wsj.com
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