Stocks rise in prolonged rally, regaining more ground

NEW YORK (AP) — The Dow Jones Industrial Average rose more than 800 points and the S&P 500 had its best day in more than two years on Tuesday, as the market clawed back more ground than it lost in several miserable weeks on Wall Street.

NEW YORK (AP) — The Dow Jones Industrial Average rose more than 800 points and the S&P 500 had its best day in more than two years on Tuesday, as the market clawed back more ground than it lost in several miserable weeks on Wall Street.

The S&P 500 rose 3.1%, its best day since May 2020, as all but six stocks in the index posted gains. The benchmark index has been rising since hitting its lowest point of the year on Friday to cap a September drop.

Twitter rose 22.2% after Elon Musk said he would go ahead with his $44 billion acquisition of the social media company, abandoning months of efforts to get out of the deal.

The Dow Jones rose 2.8% and the Nasdaq Composite rose 3.3%. Small company stocks also made solid gains, lifting the Russell 2000 a further 3.9%. European and Asian markets were also up sharply.

The two-day rally hit markets as investors looked for signs that central banks might ease aggressive rate hikes aimed at reining in the highest inflation in four decades. australian central bank made an interest rate hike that was smaller than previous ones and helped the Australian market jump 3.8%.

In the United States, a government report on Work offers showed that the number of jobs available in the US plummeted in August compared to July. It’s a sign that companies may pull back further on hiring and potentially cool chronically high inflation, which could allow the Federal Reserve to slow the pace of rate hikes.

Analysts tried to play down the rally in early October, which followed a more than 9% drop last month. Major indices remain in a bear market after falling 20% ​​or more from their most recent all-time highs.

“Wild moves like these can be hard to swallow, but they’re not surprising,” said Lindsey Bell, chief money and markets strategist at Ally. “It’s natural that some of the biggest up days in the market cluster around the biggest down days.”

John Lynch, chief investment officer at Comerica Wealth Management, said the optimism could be wrong as inflation remains stubbornly high.

“Investors should be concerned about false positives,” he said. “Beware of the story of bear market rallies, they can be very seductive.”

Major indexes could expect more declines ahead, Lynch said, as more economic data and the next round of earnings reports provide a clearer picture of how inflation continues to affect business operations and consumer spending.

The S&P 500 rose 112.50 points to 3,790.93, while the Dow gained 825.43 points to close at 30,316.32. The Nasdaq rose 360.97 points to 11,176.41 and the Russell 2000 added 66.90 points to 1,775.77.

Treasury yields continued to retreat from their multi-year highs, helping to ease some of the pressure on stocks. The 10-year Treasury yield, which helps set rates on mortgages and many other types of loans, fell to 3.64% from 3.65% late Monday. It hit 4% last week after starting the year at just 1.51%.

The two-year Treasury yield, which more closely tracks expectations for Federal Reserve action, fell to 4.10% from 4.12% on Monday night.

The market was mostly calm on the company news ahead of the next round of corporate earnings.

Cruise line operators were among the biggest gainers in the S&P 500. Norwegian Cruise Line rose 16.8%, Royal Caribbean rose 16.7% and Carnival gained 13.3%.

Investors are watching closely as central banks raise interest rates to make lending more difficult and slow economic growth to try to control inflation. Investors hope their aggressive rate hikes will eventually ease, and the move by Australia’s central bank is a hopeful sign for some.

Wall Street is concerned that rate hikes, especially hikes from the Fed, could go too far in slowing growth and tip economies into recession. The Federal Reserve has already moved its key overnight rate to a range of 3% to 3.25%, from virtually zero in March.

Economic growth is already slowing globally, and the US economy contracted during the first two quarters of the year, which is seen as an informal sign of a recession. The economy still has several strong pockets, including employment.

Wall Street will get a more detailed look at the US employment situation this week, with a report on hiring by private companies due Wednesday, the latest count of weekly jobless claims on Thursday and the government’s monthly employment report for September on Friday.

If those reports point to a still-strong job market, that could trigger a sell-off in the bond market, weighing on stocks, said Jay Hatfield, chief executive of Infrastructure Capital Advisors.

“All of that could come to the stock market because right now the bond market is really driving the stock market,” he said.


Yuri Kageyama and Matt Ott contributed to this report.

Damian J. Troise and Alex Veiga, The Associated Press

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