Economically sensitive stocks boosted Wall Street on Thursday as investors largely ignored concerns about the Federal Reserve’s plans for the downside, while forecast increases from Accenture and Salesforce added to the positive sentiment.
The Fed said Wednesday that it could start cutting its monthly bond purchases in November, and that interest rates could rise faster than expected for next year.
The central bank also projected 4.2% inflation by year-end, more than double its target rate of 2.0%. Still, the bank remained optimistic about a return to economic normality for next year.
Financial stocks performed the best in early trading, jumping 1.7% on expectations of higher interest rates.
Sectors linked to commodities rose in hopes of a pick-up in demand, as well as strong oil and metal prices due to supply constraints.
IT services provider Salseforce.com Inc jumped 4% and was among the top drivers for the S&P and the Dow after it raised its annual earnings forecast.
Accenture added nearly 2% after the IT consultancy raised its outlook for the first quarter.
Investors ignored data showing a slowdown in business activity growth and an increase in jobless claims, in line with expectations of a slowdown in economic growth in the third quarter.
“The Fed’s stance remains accommodative and it is reasonable that the Fed wants to return to normal if the economy is as robust as (recent) data suggests,” said Mike Loewengart, managing director of investment strategy at E * TRADE Financial. .
Last week’s data showed a surprising increase in retail sales, suggesting that consumer spending, a key indicator of economic growth, remained strong despite the impact of the Delta variant of the coronavirus.
“Given the recent volatility, investors are likely to view the reduction projection and possible rate hikes in 2022 as a vote of confidence that the recovery is on the right track,” Loewengart said.
At 11:05 a.m. ET, the Dow Jones Industrial Average rose 475.61 points, or 1.39%, to 34,733.93, the S&P 500 gained 57.36 points, or 1.3%, to 4,452.41, and the Nasdaq Composite gained 147.22 points, or 0.99 %, to 15,042.37.
The Fed’s November deadline had largely been set on the markets. Relief on the Fed, coupled with easing concerns of a default by Chinese real estate developer Evergrande, sent all three Wall Street indexes up about 1% on Wednesday.
The Dow Jones and the S&P were poised for their best day in two months as they posted a strong recovery from the two-month lows reached earlier this week.
Wall Street indices are still trading lower for the month, due to weak seasonal trends, as well as concerns about fiscal spending and slowing economic growth.
Forward issues outnumbered those that declined 3.8 to 1 on the NYSE and 2.7 to 1 on the Nasdaq.
The S&P 500 posted 18 new 52-week highs and 3 new lows, while the Nasdaq posted 70 new highs and 25 new lows.
(Business Standard staff may have only modified the title and image of this report; the rest of the content is automatically generated from a syndicated feed.)