US stocks rose on Wednesday as Wall Street looked to recover from this week’s losses.
The S&P 500 jumped 1.2%, and the Dow Jones Industrial Average rose 300 points, or nearly 1%. The high-tech Nasdaq Composite is up more than 2%.
Bonds were also pushed forward after the Fed’s hawkish speech on Tuesday, with the benchmark 10-year Treasury yield near 2.8% and a two-year yield of 3.1%.
Upbeat economic data showing a recovery in the US service sector in July helped lift sentiment on Wednesday. The ISM Services Purchasing Managers’ Index reached 56.7 percent last month from a June reading of 55.3 as supply chain issues appeared to be easing.
In commodity markets, the Organization of the Petroleum Exporting Countries (OPEC) and its allies gave the green light for a slight increase of about 100,000 barrels per day in oil production after calls from the United States and other major consumers for more supplies. The move, while symbolic, is expected to have little impact on prices. Crude oil was trading near intraday highs, with West Texas Intermediate (CL=F) just above $95 a barrel and Brent crude (BZ=F) at around $101.20.
Wednesday’s moves follow a bearish day on Wall Street that saw stocks close lower for a second consecutive session amid a high-risk visit by House Speaker Nancy Pelosi to Taiwan that raised concerns about US-China relations.
CVS (CVS) shares gained nearly 5% after the pharmacy chain reported earnings that beat estimates and raised full-year guidance.
Starbucks (SBUX) shares rose 1.3% after the coffee shop disclosed financial third-quarter earnings late Tuesday that largely beat Wall Street estimates despite inflationary pressures, labor costs, union efforts and the search for a permanent CEO spoil the quarter. .
Meanwhile, AMD (AMD) shares fell 3% after the chip maker warned of a worse-than-expected third quarter late Tuesday.
As economic data shows signs of slowing and companies continue to cloud their outlook, analysts are making larger-than-average cuts to earnings per share estimates for S&P 500 companies for the third quarter. According to data from FactSet, Wall Street lowered its earnings-per-share consensus estimate from bottom to top by 2.5% from June 30 to July 28. Over the past five years — or 20 quarters — the average drop in the bottom-up EPS estimate during the first month of a quarter has been 1.3%.
On Tuesday, investors digested the Fed’s hawkish words indicating that more rate hikes are underway in the central bank’s efforts to curb inflation. San Francisco Fed President Mary Daly said on Tuesday that policymakers are “resolutely and fully united” in their goal of restoring price stability, and Chicago Fed President Charles Evans told reporters that officials are “at least a few reports away” from seeing Sufficient improvement in inflation data to reduce the pace of rate hikes.
Meanwhile, St. Louis Fed President James Bullard said the US Federal Reserve and the European Central Bank could still make a “relatively soft landing” as they tighten monetary conditions.
“I think the markets story is still, ‘What happens with the Fed? What happens with stress? “When it comes to geopolitics, it’s not driving the market movement at the moment.”
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter Tweet embed
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