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Wall Street moves higher as investors gauge Fed“s policy path

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Raindrops hang on a sign for Wall Street outside the New York Stock Exchange in Manhattan in New York City, New York, U.S., October 26, 2020. REUTERS/Mike Segar/File Photo

Wall Street’s main indexes gained modestly on Monday as investors digested comments from U.S. Federal Reserve officials about the central bank’s plans for interest rate hikes and looked for next catalysts following last week’s big stock market rally.

Fed Vice Chair Lael Brainard signaled that the central bank would will likely soon slow its interest rates hikes. Her comments helped lift sentiment for equities that had been dampened after Federal Reserve Gov. Christopher Waller on Sunday said the Fed may consider slowing the pace of increases at its next meeting but that should not be seen as a “softening” in its commitment to lower inflation.

A massive equity rally late last week was set off by a softer-than-expected inflation report that boosted hopes the Fed could dial back on its monetary tightening that has punished markets this year.

“There is still some lingering enthusiasm about what looks like a trajectory for the Fed that is leveling off,” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.

More Fed officials are due to speak later this week while a slew of data, including on inflation, retail sales and housing, is also scheduled to land.

“There is going to be a lot to digest both in terms of Fed speak but also in terms of economic data coming out this week,” Ma said.

The Dow Jones Industrial Average (.DJI) rose 189.83 points, or 0.56%, to 33,937.69, the S&P 500 (.SPX) gained 14.75 points, or 0.37%, to 4,007.68 and the Nasdaq Composite (.IXIC) added 19.58 points, or 0.17%, to 11,342.91.

Healthcare (.SPXHC) and materials (.SPLRCM) led the way among S&P 500 sectors, both rising over 1%.

In healthcare, shares of Biogen Inc (BIIB.O) and Eli Lilly (LLY.N) gained 5% and 2%, respectively, after the failure of Swiss rival Roche’s (ROG.S) Alzheimer’s disease drug candidate.

In company news, Amazon (AMZN.O) shares fell 1% as The New York Times on Monday reported the company was planning to lay off about 10,000 people in corporate and technology jobs starting as soon as this week.

The S&P 500 last week posted its biggest weekly percentage gain since late June, while the tech-heavy Nasdaq (.IXIC) notched its best week since March. The S&P 500 is still down about 16% in 2022.

Declining issues outnumbered advancing ones on the NYSE by a 1.06-to-1 ratio; on Nasdaq, a 1.10-to-1 ratio favored advancers.

The S&P 500 posted 15 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 50 new highs and 55 new lows.

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