US stocks rally the most since March as momentum strengthens
Tech companies fueled a large rally in stocks on Wall Street on Thursday, taking the S&P 500 to its biggest gain since March.
The benchmark rose 1.7% per day after breaking a three-day losing streak. The Dow Jones Industrial Average rose 1.6% and the tech-rich Nasdaq climbed 1.7%.
Over 90% of S&P 500 stocks gained ground. Apple and Microsoft were among the big winners in the tech sector, each increasing by more than 2%.
Financials and healthcare stocks also performed well. JPMorgan Chase rose 1.5%. UnitedHealth Group rose 4.2% after the health insurer raised its profit forecast for the year after a strong third quarter.
The market gains came as investors greeted another batch of encouraging quarterly newsletters from several companies. Every S&P 500 company that has posted earnings so far this week has beaten Wall Street forecasts.
“It’s no surprise that the market reacted rather well to this,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab.
The S&P 500 gained 74.46 points to 4,438.26. It’s now on pace for a weekly gain. The Dow Jones climbed 534.75 points to 34,912.56. The Nasdaq added 251.79 points to 14,823.43.
Small business stocks also posted gains. The Russell 2000 Index rose 32.21 points, or 1.4%, to 2,274.18.
This is the first big week for companies releasing their most recent quarterly financial results. So far, investors have had mixed reactions to the latest wave of bank profits. Bank of America rose 4.5% on Thursday after beating analysts’ forecasts. Wells Fargo also beat forecast, but fell 1.6% as loan profits fell from a year ago.
Investors were also examining the latest data on jobs and inflation as they tried to assess the health and the way forward for the economy.
The Labor Department said the number of Americans claiming unemployment benefits last week fell to its lowest level since the start of the pandemic. This is a positive sign for a labor market that is still trying to recover from the initial blow of the pandemic 18 months ago. A surge of cases over the summer delayed the recovery.
The latest inflation report showed that businesses continue to be under pressure from rising costs. The Labor Department said wholesale inflation rose 8.6% in September from a year ago, the largest increase since the 12-month change was calculated for the first time in 2010.
The report came a day after the government said consumer inflation rose 5.4% in September from a year ago, equaling the highest rate since 2008.
The market has largely taken account of the inflation reports, suggesting that investors may feel more comfortable since the Federal Reserve signaled it may start cutting back on its unprecedented financial support. to the economy since the early days of the pandemic and eventually start raising its benchmark interest rate in order to fight rising inflation.
âThe market is much more concerned with inflation than with rising interest rates,â Frederick said. “At this point, yes, inflation is high, but the Fed seems ready to raise rates to control it and the market seems to be comfortable with that.”
Rising inflation has pushed up the costs of consumer goods. Analysts fear this could affect people’s spending and slow the economic recovery. Investors will receive an spending update on Friday when the Commerce Department reports on retail sales for September.
Bond yields fell slightly. The 10-year Treasury yield fell to 1.52% from 1.55% on Wednesday night.