U.S. Stocks Rebound Wednesday After Suffering Worst Day Drop on Tuesday Since May
U.S. stocks bounced back Wednesday after plunging on Tuesday, helping to fight off several unfavorable trading sessions during September.
The Dow Jones Industrial Average increased about 236.82 points, or nearly 0.7%, to 34,814.39, CNBC reported. The S&P 500 climbed up 0.8% to 4,480.70. The Nasdaq Composite traded up 0.8% to 15,161.53.
According to the Wall Street Journal, the S&P regained some of its losses after falling 2% on Tuesday, which was its its worst one-day performance since May. The decline came as Federal Reserve Bank Chairman Jerome Powell is set to testify to Congress that a jump in inflation could last longer than expected, MarketsBusinessInsider.com reported. The benchmark 10-Year U.S. Treasury yield hit a three-month high of 1.53% on Tuesday.
Still, investors remain optimistic though some predict a correction could be forthcoming.
“Despite concerns about the recent downshift in economic and business cycle momentum, we remain confident that strong growth lies ahead and activity is bound to re-accelerate,” JPMorgan strategist Dubravko Lakos-Bujas, wrote in a note Wednesday per CNBC
“We remain positive on the equity outlook, and expect S&P 500 to reach 4,700 by end of this year and surpass 5,000 next year on better than expected earnings.”
Stocks were uneven in recent days after the Federal Reserve indicated it would start to reduce its bond-buying as soon as November—and potentially start to raise interest rates next year. Rising prices for oil and other commodities also helped push bond yields up as investors prepared for higher inflation.
Markets have been bumpy this month amid rising investor worries about the delta variant sidetracking the economic recovery, combined with concerns about what the Fed’s next action will be.
For September, the Dow is down 1.5% and the S&P 500 is off roughly 0.9%. The S&P 500 is on track for its worst monthly performance since January.
The recent stock reversal is not astonishing to some investors as its comes after a long tranquil period. According to Dow Jones Market Data, the S&P has increased for seven consecutive months, marking its longest such streak since the 10 months through January 2018, the WSJ reported.
In a survey of global fund managers done in September, Bank of America revealed investors were betting on stock prices rising and inflation pressures easing.
“That’s often how it happens— you have quiet and complacent markets and then a gut check,” Keith Lerner, co-chief investment officer of Truist Advisory Services, told the WSJ.
Yet he stated he remains optimistic about the market’s outlook over the longer term.
