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Indexes bounced back and forth in a choppy trading as concerns
over Federal Reserve's next steps to tame a surging inflation
remain.
"There's just a lot of uncertainty and I think people aren't
going to really make up their minds for longer than five minutes
or five seconds, you know, until there's a little bit more
clarity or light at the end of the tunnel," said Grace Lee, an
equity income senior portfolio manager at Boston-based Columbia
Threadneedle Investments.
Money market traders see 87% odds that the Fed will hike rates
by 75 basis points at this month's meeting.
Bank of America, Barclays and Jefferies said they now see a
75-basis points interest rate hike. Before Barclays had said it
could be a 50- or 75-basis point increase, while Bank of America
and Jefferies were betting on a 50-basis point rise. Federal
Reserve Chair Jerome Powell said the central bank is "strongly
committed" to bringing inflation down and needs to keep going
until it gets the job done. Chicago Fed President Charles Evans
joined his fellow policymakers in saying that reining in
inflation is "job one." Investors are also awaiting the U.S.
August inflation report next week for fresh clues on whether the
Federal Reserve will hike rates by half or three-quarters of a
percentage point at the next policy meeting due Sept. 20-21.
Worries over aggressive monetary tightening across the globe
stalled equity markets on Thursday after the European Central
Bank hiked interest rates by an unprecedented 75 basis points
and signaled further hikes. Meanwhile, data showed the number of
Americans filing new claims for unemployment benefits fell last
week to a three-month low, underscoring the robustness of the
labor market even as the Fed raises interest rates. With
increasing odds of another outsized rate hike, both the
rate-sensitive S&P 500 bank index and the S&P 500 healthcare
sector rose 2.8% and 1.8%, respectively. The healthcare sector
was boosted by news that Regeneron Pharmaceuticals Inc's
anti-blindness treatment Eylea was shown to work as well when
given at a higher dose at a longer interval between injections.
The drugmaker's shares jumped 18.8%.
"People are embracing safety. Healthcare is a very safe sector
and it's still fairly cheap, the same way with the broader
financial sector," said Lee. The Dow Jones Industrial Average
rose 193.24 points, or 0.61%, to 31,774.52, the S&P 500 gained
26.31 points, or 0.66%, to 4,006.18 and the Nasdaq Composite
added 70.23 points, or 0.6%, to 11,862.13. GameStop Corp surged
7.4% after the video game retailer reported a
smaller-than-expected quarterly loss. American Eagle Outfitters
Inc tumbled 8.7% after the apparel maker missed second-quarter
profit estimates and said it would pause quarterly dividend as
it fortifies its finances against a hit from inflation.
Volume on U.S. exchanges was 10.19 billion shares, compared with
the 10.37 billion average for the full session over the last 20
trading days.
On Wednesday, Wall Street's main indexes climbed the most in
about a month as bond yields retreated after a recent surge that
was driven by expectations of higher interest rates. Still, the
benchmark S&P 500 is down over 16% year-to-date.
Advancing issues outnumbered declining ones on the NYSE by a
1.34-to-1 ratio; on Nasdaq, a 1.48-to-1 ratio favored advancers.
The S&P 500 posted 7 new 52-week highs and 8 new lows; the
Nasdaq Composite recorded 37 new highs and 153 new lows.
(Reporting by Carolina Mandl, with additional reporting by
Sruthi Shankar, Ankika Biswas and Anisha Sircar in Bengaluru;
Editing by Saumyadeb Chakrabarty, Maju Samuel, Vinay Dwivedi and
Aurora Ellis)
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