Wall Street stock indexes closed strong on Wednesday, putting the market on pace to break a three-week losing streak.
The S&P 500 rose 1.8% on Wednesday, its biggest single-day gain in four weeks, with about 95% of stocks in the benchmark index closing higher.
The Dow Jones Industrial Average rose 1.4% and the tech-heavy Nasdaq climbed 2.1%. Small company stocks outperformed the broader market, driving the Russell 2000 Index up 2.2%.
The indices are now all in the green for the week, a welcome respite for traders after a slump in recent weeks that wiped out much of the market’s gains following a rally in July and early August.
Wall Street watchers have warned that the market is likely to experience greater volatility in the coming weeks ahead of the Federal Reserve’s next interest rate policy update scheduled for September 21.
“It’s nice that there’s a bullish day, but I would caution anyone against being too optimistic right now,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab. “You don’t have a lot of reasons for that.”
Stocks have mostly lost ground in recent weeks after the Federal Reserve signaled it would not stop raising interest rates anytime soon to bring down the highest inflation in decades.
Wall Street remains focused on inflation and the Fed’s attempt to contain it with high interest rates. The central bank has already hiked rates four times this year and markets expect them to deliver another whopping three-quarters of a percentage point hike at their next meeting in two weeks.
The central bank has been clear on its determination to keep raising rates until it senses inflation is stabilizing or slowing. In June, Fed officials expected the benchmark rate to reach a range of 3.25% to 3.5% by the end of the year and about half a percentage point higher in 2023.
“We’re here for as long as it takes to bring inflation down,” Fed Vice Chairman Lael Brainard said Wednesday at a banking industry conference. “Our determination is firm, our objectives are clear and our tools are up to the task.”
Investors have been looking at economic data to assess whether price increases on everything from food to clothing and gasoline are easing. They are also on the lookout for any hints about potential policy changes from Fed officials.
Traders recouped some of their recent losses with Wednesday’s rally, which pushed the S&P 500 up 71.68 points to 3,979.87. The Dow gained 435.98 points to 31,581.28 and the Nasdaq gained 246.99 points to 11,791.90.
The Russell 2000 climbed 39.68 points to 1,832.
Tech stocks and retailers made solid gains. Intuit increased by 3.9%. Target rose 4.4% after announcing it was lowering the mandatory retirement age for its CEO position, allowing CEO Brian Cornell to stay on for three more years.
United Airlines rose 5.5% after raising its revenue forecast after a busy summer season. The encouraging update has helped several competitors to take off. American Airlines rose 5.1% and Delta Air Lines added 3.3%.
Energy stocks fell overall as US crude oil prices fell 5.7%. Chevron fell 1.3%.
Bond yields fell. The 10-year Treasury yield, which influences interest rates on mortgages and other loans, fell to 3.27% from 3.34% on Tuesday evening. The two-year Treasury yield, which tends to track expectations for Fed action, fell to 3.45% from 3.51%.
Markets in Europe mostly closed higher, while those in Asia mostly ended lower.
AP Economics Writer Christopher Rugaber contributed to this story.
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