Another rally on Wall Street erases losses for the week
Stocks on Wall Street rallied for the second straight day Thursday and have now reversed the market’s sharp pullback at the start of the week.
The S&P 500 rose 1.2%, with more than 85% of companies in the benchmark index notching gains. The Dow Jones Industrial Average gained 1.5% and the Nasdaq rose 1%.
The rally put the major indexes on pace for weekly gains just four days after a broad sell-off handed the S&P 500 its biggest skid since May and knocked the Dow more than 600 points lower.
The market’s sharp swing from Monday, when the S&P 500 slumped 1.7%, to Thursday, when it closed with 0.4% gain for the week, reflects how quickly investor sentiment can change.
Monday’s sell-off was triggered by concerns about the potential for a default by Evergrande, a huge, debt-laden private Chinese real estate developer. Traders also were feeling uneasy about how quickly the Federal Reserve might elect to rein in some of the support measures it’s been giving the markets and economy.
Those worries were allayed by Wednesday, when the Federal Reserve signaled it wouldn’t begin considering such a tapering of support before at least November, and indicated it may start raising its benchmark interest rate sometime next year. Investors also got reassuring news out of China, where Evergrande said it would make a payment due Thursday on a domestic bond.
“The last few days have just been this recognition that all the things that were being talked about, the market has shrugged them off,” said Michael Antonelli, managing director and market strategist at Baird, noting that the S&P 500 is only about 1.5% below its all-time high set earlier this month.
“The market was just ripe for a sell-off,” on Monday, Antonelli said. “We still have not had a 5% pullback from the highs yet this year.”
After its two-day policy meeting concluded Wednesday, the Fed said it will likely begin slowing the pace of its monthly bond purchases “soon” if the economy keeps improving. The Fed and other central banks have been buying bonds throughout the pandemic to help keep long-term interest rates low.
The yield on the 10-year Treasury rose to 1.43% from 1.32% late Wednesday, a big move.
All told, the S&P 500 index rose 53.34 points to 4,448.98. The Dow gained 506.50 points to 34,764.82, while the Nasdaq rose 155.40 points to 15,052.24. The Russell 2000 rose 40.48 points, or 1.8%, to 2,259.04.
Technology companies and banks led the way higher Thursday. Cloud-based software company Salesforce.com was a standout with a 7.2% gain after raising its sales forecast for the year. Citigroup rose 3.9%.
Other standouts included Olive Garden owner Darden Restaurants.
Its stock jumped 6.1% after delivering strong quarterly results.
European and Asian markets rose.
Gold for December delivery fell $29 to $1,749.80 an ounce. Silver for December delivery fell 23 cents to $22.68 an ounce, and December copper fell 2 cents to $4.23 a pound.
The dollar rose to 110.24 Japanese yen from 109.89 yen. The euro rose to $1.1747 from $1.1692.