- 2022-10-13
Summary: Expectations of monetary policy changes spur big rally in New York Stock market
New York Stock market sentiment improved on renewed expectations of a possible change in the Federal Reserve's monetary policy, Treasury yields fell significantly and the three major stock indexes opened higher for the third day before closing with a sharp rebound.
By the end of the day, the Dow Jones Industrial Average was up 765.38 points, or 2.66%, at 29,490.89. The Standard & Poor's 500-stock index rose 92.81 points, or 2.59%, to 3678.43. The Nasdaq Composite Index rose 2.27%, or 239.82 points, to 10,815.44.
The 10-year Treasury yield fell 19.29 basis points to 3.636 per cent. The yield on the two-year US Treasury fell 16.9 basis points to 4.109 per cent.
Sam Stovall, chief investment strategist for U.S. equity strategy at market research firm Financial Research & Analytics, said the S&P 500 fell more than 9% in September, given how oversold the market was. Weaker-than-expected readings from the Institute for Supply Management on manufacturing sentiment and spending in the U.S. construction sector prompted speculation that the Fed might not be as aggressive in raising interest rates. As a result, Treasury yields fell and the dollar fell, contributing to the day's stock rally.
Data from the Institute for Supply Management showed the manufacturing composite index came in at 50.9 in September, below market expectations of 52.4 and 52.8 in August.
Construction spending fell 0.7 per cent in August from a month earlier, a steeper decline than expected, compared with a revised 0.6 per cent drop in July from 0.4 per cent, Commerce Department data showed.
Edward Moya, senior market analyst at online currency trading platform Adanda Corp., said Wall Street appears to be increasingly pricing in a possible end to monetary tightening by the Federal Reserve in December.
However, analysts believe that there is still a lack of conditions for the market to continue to rise. Cooling global demand and steadily improving supply should lead to lower commodity price growth next year, Federal Reserve Bank of New York President John Williams said Wednesday. These factors should bring inflation down to about 3 per cent next year. But it will take longer for inflation to fall to the Fed's 2% target.