US stocks rose on Wednesday after several retailers offered investors some optimism for this year’s sales and the release of the minutes of the most recent Federal Reserve policy meeting noted few changes. in the central bank’s plan to fight inflation.
After briefly opening lower, stock indices turned green at the first quotations. Benchmarks rose after 2 p.m. ET, when Fed minutes were released earlier this month.
The S&P 500 index rose 37.25 points, or 0.9%, to 3,978.73. The Nasdaq Composite rose 170.29 points, or 1.5%, to 11,434.74, a reversal of the strong sell-off of technology stocks the day before. The Dow Jones Industrial Average rose for the fourth consecutive day of trading, adding 191.66 points, or 0.6%, to 32,120.28.
Discretionary stocks advanced the S&P 500 to gain 3.4%. Several retailers, including Nordstrom and Express, raised their forecasts for 2022, while others such as Dick’s Sporting Goods indicated that the business was not getting worse. The brightest outlook offered investors a welcome change from last week, when Target and Walmart reported disappointing results.
“Some investors were expecting Armageddon retailer,” said Matt Peron, research director at Janus Henderson Investors. “The narrative was that this could be another blunt week. Now, the market is taking over from the consumer sector.”
Shares have had a rough start to the week, driven by concerns about the tightening of the Fed’s monetary policy to combat high inflation and the degree of slowdown it could cause. The S&P 500 is down 17% from its last record high in January and fell briefly into bearish territory last Friday before offsetting losses.
“It has been very volatile, to say the least. This is linked to the question of the recession, whether it comes or not. This is indeed what the market has been pushing and pulling between them,” said Fahad Kamal. , investment director of Kleinwort Hambros.
The minutes of the Fed’s May 3-4 meeting, released on Wednesday, showed that officials discussed the possibility of raising interest rates to levels high enough to deliberately slow economic growth as the central bank runs. to combat high inflation. US durable goods orders for April rose 0.4%, at a slower pace than economists expected.
The Fed’s minutes offered few, if any, surprises on officials’ thinking, said Phillip Toews, executive director of Toews Asset Management. Wednesday’s rally, which picked up strength throughout the afternoon, may more than reflect the feeling that many stocks had already fallen enough, at least for now. “I think we can be in a bear market here,” he said.
Stocks enter a bearish market when an index like the S&P 500 falls at least 20% from a recent high. On Friday, this benchmark was close to ending in a bear market before a rally at the end of the session.
Shares have fallen in 2022 as investors have adjusted to rising consumer prices and the Fed’s response. As rates have risen and the outlook for the economy has darkened, the shares of many companies have become increasingly expensive, at least in relation to their profits, said Sean O’Hara, president of Pacer ETFs Distributors.
“When one goes up,” said Mr. O’Hara, “the other must go down.”
Yield on the 10-year Treasury benchmark fell to 2.746% from 2.758% on Tuesday. It has declined over five of the last six trading sessions. Yields fall as prices rise.
“The market is appreciating the slowdown that will eventually come from the Fed’s tightening. It also predicts that inflation in 2023 will slow to much more reasonable levels,” said Antonio Cavarero, head of investment at Generali Insurance Asset Management. .
Public debt tends to perform well in times of slower economic growth, which has led to a stabilization of the bond market in recent days.
When markets are down, some investors are trying to make a profit using a strategy known as buy down. WSJ’s Gunjan Banerji tells us why this approach is risky in today’s volatile market, although it can be tempting. Illustration: Reshad Malekzai
Oil prices rose 47 cents, or 0.4%, to $ 114.03 a barrel, a world-leading Brent crude. The U.S. Secretary of Energy said the Biden administration has not ruled out a ban on oil exports to control domestic fuel prices, Reuters reported.
In individual stocks, Snap shares rose $ 1.37, or 11%, to $ 14.16. Shares of the Snapchat maker fell 43% on Tuesday after issuing a earnings warning, citing macroeconomic conditions that have deteriorated faster and beyond expectations.
“Clearly there has been a revaluation of technology valuations. It is impossible to know how far it goes, but some of them are quality companies and much cheaper than those that have been trading recently,” Kamal said. “If you’re a long-term investor, it’s going to be interesting.”
Retailer Nordstrom rose $ 2.90, or 14%, to $ 23.58 after raising its focus on year-over-year revenue growth. Express clothing company rose 16 cents, or 6.7 percent, to $ 2.54 after lower-than-expected losses and increased sales guidance. Dick’s rose $ 6.90, or 9.7%, to $ 78.14.
Homebuilder Toll Brothers rose $ 3.55, or about 8%, to $ 48.09 after reporting earnings and profits that exceeded analysts’ expectations.
Technology-focused Nasdaq Composite closed at around 2.3% on Tuesday.
Photo: justin lane / Shutterstock
Abroad, the pan-continental Stoxx Europe 600 rose 0.6%.
In Asia, the main landmarks were mixed. Shanghai’s composite index rose 1.2% while Hong Kong’s Hang Seng rose 0.3%. Japan’s Nikkei 225 was down 0.3%.
—Ryan Dezember contributed to this article.
Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Justin Baer to justin.baer@wsj.com
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