Wall Street’s main stock indices rebounded strongly this Monday and recorded their biggest gains in two monthsat the beginning of what promises to be a hectic week marked by intense reporting agenda, economic data and the Federal Reserve’s two-day monetary policy meeting, with subsequent decision on interest rates.
The Dow Jones Industrial Average rose 511.37 points, or 1.6%, to 32,928.96 units. The S&P 500 gained 49.45 points, or 1.2%, to 4,166.82, and the Nasdaq Composite added 146.47 points, or 1.2%, to 12,789.48.
A broad rally saw the three major US stock indexes rise more than 1%, recovering from the previous week’s sell-off. Interest rate-sensitive mega-cap measures provided the most bullish support.
*”Today there was a rebound in profits”, said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York. “The market was oversold and the reality is that earnings have been quite good, the US economy continues to move forward and is likely to do so in the fourth quarter and the first part of next year.”
The third quarter earnings season has reached its midpoint: 251 of the S&P 500 companies have submitted their reports. Of them, 78% exceeded Wall Street estimates, according to LSEG.
Analysts now collectively expect third-quarter S&P 500 annual earnings growth of 4.3%, a marked improvement from the 1.6% year-over-year growth expected in early October.
McDonald’s rose after beating estimates for third-quarter profits and sales. However, Onsemi fell after the chipmaker forecast fourth-quarter revenue and profit due to slowing demand for electric vehicles.
Geopolitical concerns, as well as rising Treasury yields, have weighed on US equities this monthdragging the benchmark S&P 500 index down around 10% from its intraday high in July.
On Tuesday, the Federal Open Market Committee (FOMC) is set to begin a two-day monetary policy meeting, which is expected to culminate in a decision to maintain the US Federal Reserve’s target interest rate at 5.25%. 5.50%.
The accompanying statement and subsequent question-and-answer session from Fed Chair Jerome Powell will be scrutinized by investors for clues about the central bank’s path forward on rates.
“The Federal Reserve wants to see the cumulative effects of its rate increases on the economy, but has also said it is prepared to overstep with great caution as long as inflation is above 3%.”Pursche said.
The Bank of England and the Bank of Japan will also announce their verdict on interest rates this week.
Source: Ambito
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