Stocks erase weekly losses on Wall Street

Stock indexes on Wall Street closed solidly higher Wednesday, placing the market on pace to break a three-week losing streak.

The S&P 500 rose 1.8 percent Wednesday, its biggest singleday gain in four weeks, with roughly 95 percent of the stocks in the benchmark index closing higher.

The Dow Jones Industrial Average rose 1.4 percent and the tech-heavy Nasdaq climbed 2.1 percent. Smaller company stocks outgained the broader market, driving the Russell 2000 index 2.2 percent higher.

The indexes are now all in the green for the week, a welcome respite for traders after a slump in recent weeks that erased much of the market’s gains from a July and early August rally.

Wall Street watchers cautioned that the market is likely to see more volatility in coming weeks ahead of the next Federal Reserve interest rate policy update scheduled for Sept. 21.

“It’s good that there’s an up day, but I would caution anyone not to be too optimistic right now,” said Randy Frederick, managing director of trading & derivatives at Charles Schwab. “You don’t have a whole lot of reason for that.”

Stocks have been mostly losing ground in recent weeks after the Federal Reserve indicated it will not let up anytime soon on raising interest rates to bring down the highest inflation in decades.

Wall Street’s focus remains on inflation and the Fed’s attempt to rein it in. The central bank has already raised rates four times this year and markets expect them to deliver another jumbo-sized increase at their next meeting in two weeks.

The central bank has been clear about its determination to continue raising rates until it feels that inflation is leveling off or cooling. In June, Fed officials projected that the benchmark rate will reach a range of 3.25 percent to 3.5 percent by year’s end and roughly a half-percentage point more in 2023.

“We are in this for as long as it takes to get inflation down,” Fed Vice Chair Lael Brainard said at a banking industry conference on Wednesday. “Our resolve is firm, our goals are clear, and our tools are up to the task.”

Investors have been reviewing economic data to gauge whether price increases on everything from food to clothing and gas are easing.

Traders clawed back some of their recent losses with Wednesday’s rally, which pushed the S&P 500 up 71.68 points to 3,979.87. The Dow rose 435.98 points to 31,581.28, and the Nasdaq gained 246.99 points to 11,791.90.

The Russell 2000 climbed 39.68 points to 1,832.

Markets in Europe closed mostly higher, while those in Asia ended mostly lower.