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Wall Street closed higher on Monday, buoyed by the prevailing sentiment that the Fed is looking to slow down its policy tightening. A major economic report showed a contraction in business activity, underscoring the notion that the Fed moves have worked and that it would pause to take stock. All three major indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 1.3% or 417.06 points to close at 31,499.62 points. Twenty-six components of the 30-stock index ended in the green, three ended in the red, while one remained unchanged.
The S&P 500 gained 1.2% or 44.59 points to finish at 3,797.34 points. Nine out of the 11 broad sectors of the benchmark index closed in the green. The Health Care Select Sector SPDR (XLV), the Consumer Staples Select Sector SPDR (XLP) and the Technology Select Sector SPDR (XLK) advanced 1.9%, 1.8% and 1.4%, respectively, while the Materials Select Sector SPDR (XLB) lost 0.6%.
The tech-heavy Nasdaq gained 0.9% or 92.90 points to end at 10,952.61 points led by large-cap tech stocks.
The fear-gauge CBOE Volatility Index (VIX) increased 0.5% to 29.85. A total of 11.8 billion shares were traded on Monday, higher than the last 20-session average of 11.6 billion. Advancers outnumbered decliners on the NYSE by a 1.36-to-1 ratio. On Nasdaq, a 1.03-to-1 ratio favored advancing issues.
Market Upbeat As Fed Officials Signal Policy Debate
The report from the Wall Street Journal and various comments coming in from important Fed officials like Christopher Waller and Mary Daly late last week suggested that the decision on interest rate hike in November would go down on expected lines. However, starting December, the Fed would be debating whether to continue with its stringent tightening of monetary policy to tackle inflation.
There is an overarching feeling that if the current steep rate of hikes is continued, the U.S. economy would land in a recession. Officials seem inclined to debate it out in the Fed December meeting. There is talk that the rate of hikes might come down from the December meet and that a total pause might be taken early next year as the Fed would like to take stock of what its policy tightening has achieved before taking the decision to push forward.
S&P Global said on Monday that its Manufacturing and Services PMI Index fell to 47.3 this month from a reading of 49.5 in September. This implied that business activity had contracted for the fourth straight month in October. The major reason cited for the fall in the report was the weakening of client demand, a direct fallout of the pressing interest rate hikes implemented by the central bank. Grim as it may be, the report brought some cheer to investors as it indicated that the Fed’s endeavor to slow the economy down was taking shape, and it might now be pushed into going slow on the steep rate of hikes lest it went overboard.
The U.S. 10-year treasury yield, however, increased on the manufacturing and services report showing that business had contracted. The benchmark yield added 3 bps to close the day at 4.248% after having fallen earlier in the session. Yields and prices are inversely related in the bond market.
Sectors that made most of the market doing well on rising confidence in the Fed’s policies going forward were Healthcare and Technology. Technology also did well with investors remaining upbeat about this being a big-tech earnings week.
Image: Bigstock
Stock Market News for Oct 25, 2022
Wall Street closed higher on Monday, buoyed by the prevailing sentiment that the Fed is looking to slow down its policy tightening. A major economic report showed a contraction in business activity, underscoring the notion that the Fed moves have worked and that it would pause to take stock. All three major indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 1.3% or 417.06 points to close at 31,499.62 points. Twenty-six components of the 30-stock index ended in the green, three ended in the red, while one remained unchanged.
The S&P 500 gained 1.2% or 44.59 points to finish at 3,797.34 points. Nine out of the 11 broad sectors of the benchmark index closed in the green. The Health Care Select Sector SPDR (XLV), the Consumer Staples Select Sector SPDR (XLP) and the Technology Select Sector SPDR (XLK) advanced 1.9%, 1.8% and 1.4%, respectively, while the Materials Select Sector SPDR (XLB) lost 0.6%.
The tech-heavy Nasdaq gained 0.9% or 92.90 points to end at 10,952.61 points led by large-cap tech stocks.
The fear-gauge CBOE Volatility Index (VIX) increased 0.5% to 29.85. A total of 11.8 billion shares were traded on Monday, higher than the last 20-session average of 11.6 billion. Advancers outnumbered decliners on the NYSE by a 1.36-to-1 ratio. On Nasdaq, a 1.03-to-1 ratio favored advancing issues.
Market Upbeat As Fed Officials Signal Policy Debate
The report from the Wall Street Journal and various comments coming in from important Fed officials like Christopher Waller and Mary Daly late last week suggested that the decision on interest rate hike in November would go down on expected lines. However, starting December, the Fed would be debating whether to continue with its stringent tightening of monetary policy to tackle inflation.
There is an overarching feeling that if the current steep rate of hikes is continued, the U.S. economy would land in a recession. Officials seem inclined to debate it out in the Fed December meeting. There is talk that the rate of hikes might come down from the December meet and that a total pause might be taken early next year as the Fed would like to take stock of what its policy tightening has achieved before taking the decision to push forward.
S&P Global said on Monday that its Manufacturing and Services PMI Index fell to 47.3 this month from a reading of 49.5 in September. This implied that business activity had contracted for the fourth straight month in October. The major reason cited for the fall in the report was the weakening of client demand, a direct fallout of the pressing interest rate hikes implemented by the central bank. Grim as it may be, the report brought some cheer to investors as it indicated that the Fed’s endeavor to slow the economy down was taking shape, and it might now be pushed into going slow on the steep rate of hikes lest it went overboard.
The U.S. 10-year treasury yield, however, increased on the manufacturing and services report showing that business had contracted. The benchmark yield added 3 bps to close the day at 4.248% after having fallen earlier in the session. Yields and prices are inversely related in the bond market.
Sectors that made most of the market doing well on rising confidence in the Fed’s policies going forward were Healthcare and Technology. Technology also did well with investors remaining upbeat about this being a big-tech earnings week.
Consequently, shares of Apple Inc. (AAPL - Free Report) and NVIDIA Corporation (NVDA - Free Report) rose 1.5% and 1.1%, respectively. Both carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.