4:05pm: Wall Street snaps three-week losing streak
US stocks put an end to a three-week losing streak on Friday, as investors signaled the ECB hike and Powell’s warning about more rate increases is behind them.
At the close, the S&P 500 had gained 1.5% at 4,067; the Dow ended 1.2% higher at 32,152 and the Nasdaq ran another. 2.1% to close at 12,112.
12.05pm: US indices firmly in the green
US indices saw the Dow Jones jump over 300 points midday, as traders looked to close the week on a positive note.
At midday, the Dow Jones Industrial Average was up 1.03% or by 329 points to 32,103, the S&P 500 was up by 1.25% at 4,056, while the Nasdaq Composite was up by 1.74% at 12,069.
Chris Beauchamp, chief market analyst at online trading platform IG, said markets are finishing the week on a decisively risk-on note, with stocks making further headway in the final session.
Beauchamp added that investors have put US Federal Reserve chair Jerome Powell’s warning about more rate increases behind them, allowing the rally of the past two days to gain strength.
“While the broader bear market most likely has further to run, it looks like the next bear market rally has also kicked into action. This provides scope for some significant short-term upside in stocks, although traders will probably only stick around for a while, and investors should be careful not to jump in too quickly or too enthusiastically,” Beauchamp said in a statement.
At midday, the major movers included cloud security firm Zscaler, up over 19% after posting strong second quarter earnings, and DocuSign, up 8% after its earnings beat Wall Street estimates.
On the downside, energy tech company Enphase was down 6%, but was still up by US$2 to $296 from earlier in the session.
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9.35am: Wall Street starts final session of the week in positive territory
US stocks opened higher on Friday as investors digested Fed chair Jerome Powell’s latest comments which all but confirmed a 75 basis point interest rate hike was coming later this month.
At the open, the Dow Jones Industrial Average had added 170 points or 0.5% at 31,945 points, the S&P 500 was up 27 points or 0.7% at 4,033 points, and the Nasdaq Composite had gained 102 points or 0.9% at 11,964 points.
Bitcoin USD also rallied, up almost 10% at about $20,980.
In terms of other major movers, DocuSign Inc stock had soared about 11% after the company posted better-than-expected 2Q results and raised its subscription revenue guidance for the year.
After jumping almost 17% yesterday on rumours of a potential buyout, ride share company Lyft Inc (NASDAQ:LYFT) was up about 2%.
6.30am: Further gains?
US stocks were expected to open higher on Friday as investors consider the latest comments from US Federal Reserve chairman Jerome Powell on the likely path for interest rates in the world’s biggest economy.
Speaking yesterday, Powell noted that rate-setters will have to act “forthrightly” to rein in inflation. His words were taken to mean that the Fed will raise interest rates by 75 basis points at its next meeting later this month.
Futures for the Dow Jones Industrial Average were trading up 0.7% pre-market, while those for the broader S&P 500 index were up 0.8%, and futures for the tech-laden Nasdaq-100 were 1% higher.
Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, noted that US indices had a positive session yesterday even though Federal Reserve chairman Jerome Powell hinted that aggressive rate hikes will continue.
“The S&P 500 closed above the 4,000 mark, while Nasdaq added 0.6%. Futures hint at a positive start at the time of writing,” she added.
Powell’s words backed up comments from other rate-setters. Earlier this week, the Fed’s vice chair Lael Brainard said that rates will be hiked to restrictive levels while another Fed member, Loretta Mester, noted that the US benchmark rate will go above 4% in early 2023.
The Fed’s next rate verdict is due on September 21 and markets are pricing in a 75 basis point hike. Such a hike would be the third in a row.
Elsewhere, the European Central bank raised the interest rates by 75 basis points at yesterday’s monetary policy meeting and said there will be more rate hikes to fight inflation. The decision highlights the specter of rising prices across the globe.
Meanwhile, the dollar’s strength continued, suggesting that turbulence elsewhere is helping shore up the US currency.
“Inflation in the US remains high, the US labor market is relatively strong – even too strong, the medium-term outlook for the US economy is much better when compared to Europe or the UK, and the periods of global crisis normally benefits the greenback,” noted Ozkardeskaya.
Some of those flows may be heading for US stocks and bouts of bargain hunting are expected.
Contact the author at jon.hopkins@proactiveinvestors.com