Wall St. extends rally as economic-sensitive sectors bounce back; above 500 pt

The Fed said on Wednesday that it could begin reducing its monthly bond purchases by November, and that interest rates could rise faster than expected by next year.

The central bank also projected inflation for the year-end at 4.2%, more than double its target rate of 2.0%. Nevertheless, the bank remained optimistic about a return to economic normalcy by next year.

Financial stocks performed the best in early trade, jumping 1.7% on expectations of higher lending rates.

Expectations of a pick-up in demand as well as a firming up of oil and metal prices on account of supply constraints led to a rally in the commodity-linked sectors.

IT services provider Salseforce.com Inc jumped 4% and was one of the top boosts after the S&P and the Dow raised its annual earnings forecasts.

Accenture added about 2% after the IT consulting firm raised its first-quarter outlook.

Investors touted data showing a slowdown in business activity growth and a rise in jobless claims, in line with expectations of a slowdown in economic growth in the third quarter.

“The Fed’s stance is still lenient and it is reasonable for the Fed to return to a state of normalcy if the economy is strong according to (recent) data,” said Mike Lowengart, managing director of investment strategy at E*Trade Financial. .

Last week’s data showed a surprising jump in retail sales, suggesting that consumer spending, a key gauge of economic growth, remained strong despite the impact of the delta version of the coronavirus.

“Given the recent volatility, it is likely that investors are viewing the taper projection and potential 2022 rate hikes as a vote of confidence that recovery is on track,” Lowengart said.

At 10:56 a.m. ET, the Dow Jones Industrial Average rose 510.71 points, or 1.49%, to 34,769.03, the S&P 500 rose 58.40 points, or 1.33%, to 4,454.04, and the Nasdaq Composite rose 158.74 points, or 1.07%, to 15,055.59. .

The Fed’s November deadline was largely dictated by the markets. All three Wall Street indexes jumped nearly 1% on Wednesday, with relief on the Fed as well as easing of default concerns by Chinese asset developer Evergrande.

The Dow and the S&P were set for their best day in two months, as they staged a strong recovery from two-month lows earlier this week.

Wall Street indices are still trading lower for the month, driven by weak seasonal trends as well as concerns over a slowdown in fiscal spending and economic growth.

The number of advance issues declined to a 3.8-to-1 ratio on the NYSE and a 2.7-to-1 ratio on the Nasdaq.

The S&P 500 recorded 18 new 52-week highs and 3 new lows, while the Nasdaq recorded 70 new highs and 25 new lows.

This story has been published without modification in text from a wire agency feed. Only the title has been changed.