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Wall Street closed sharply higher on Tuesday, extending its rally to the third session in a row. Soft economic data underscored the notion that the Fed policy of aggressive and sustained rate hikes to control inflation is taking effect. Treasury yields declined in support of the sentiment. All three major indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 1.1% or 337.12 points to close at 31,836.74 points. Twenty-eight components of the 30-stock index ended in the green, while two ended in the red.
The S&P 500 gained 1.6% or 61.77 points to finish at 3,859.11 points. All the 11 broad sectors of the benchmark index closed in the green. The Real Estate Select Sector SPDR (XLRE), the Communication Services Select Sector SPDR (XLC) and the Consumer Discretionary Select Sector SPDR (XLY) advanced 4%, 2.7% and 2.5%, respectively.
The tech-heavy Nasdaq gained 2.3% or 246.50 points to end at 11,199.12 points led by large-cap tech stocks.
The fear-gauge CBOE Volatility Index (VIX) decreased 4.7% to 28.46. A total of 11.9 billion shares were traded on Tuesday, higher than the last 20-session average of 11.6 billion. Advancers outnumbered decliners on the NYSE by a 5.35-to-1 ratio. On Nasdaq, a 3.67-to-1 ratio favored advancing issues.
Investors Expect Lower Hike From Fed’s December Meet
The recent slew of economic data, media reports and comments from important Fed officials have largely indicated that the Fed is looking to loosen its grip on the extremely tight monetary policy moves it has been undertaking in its bid to bring down inflation. While it has been suggested that the decision on interest rate hike in November would be in tune of 75 bps, the Fed would also be debating when and how to start easing the planned hate hikes.
Rumors are rife that the rate of hikes might come down from the December meeting itself, and the market is weighing up whether the Fed would opt for a 50 bps hike. Coupled with the fact that officials have also suggested that the Fed might go for a total pause in hiking rates in early 2023, the market is upbeat on signs of the Fed slowing down.
Annual home prices saw their biggest monthly decline since 1987 as the Case-Shiller index for August emerged Tuesday. Both the 10-Composite and 20-Composite fell 1.6% from the previous period. The national index fell 1.1%. These numbers, which follow other soft economic data throughout last week, have acted as a catalyst to fuel the rising impression that the Fed policies have started taking effect, and would, in turn, recognize the fact and initiate ease off.
The 10-year Treasury Yield Declines
The U.S. 10-year treasury yield decreased on soft economic data, adding to the notion that the Fed might turn dovish soon. The benchmark yield lost 15 bps to close the day at 4.103% after attaining 14-year highs earlier in the week. Yields and prices are inversely related in the bond market. Yields move in inverse relation to stock prices. Lower bond yields have a positive effect on stocks because they push up the relative value of earnings from these stocks in the future.
Sectors that made most of the market doing well on rising confidence in the Fed’s policies going forward were Real Estate and Consumer Discretionaries.
According to a report published by the Conference Board, Consumer Confidence for October came in at 102.5, less than the consensus of 106.3 for the period, and less than the revised September number of 107.8.
Image: Bigstock
Stock Market News for Oct 26, 2022
Wall Street closed sharply higher on Tuesday, extending its rally to the third session in a row. Soft economic data underscored the notion that the Fed policy of aggressive and sustained rate hikes to control inflation is taking effect. Treasury yields declined in support of the sentiment. All three major indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 1.1% or 337.12 points to close at 31,836.74 points. Twenty-eight components of the 30-stock index ended in the green, while two ended in the red.
The S&P 500 gained 1.6% or 61.77 points to finish at 3,859.11 points. All the 11 broad sectors of the benchmark index closed in the green. The Real Estate Select Sector SPDR (XLRE), the Communication Services Select Sector SPDR (XLC) and the Consumer Discretionary Select Sector SPDR (XLY) advanced 4%, 2.7% and 2.5%, respectively.
The tech-heavy Nasdaq gained 2.3% or 246.50 points to end at 11,199.12 points led by large-cap tech stocks.
The fear-gauge CBOE Volatility Index (VIX) decreased 4.7% to 28.46. A total of 11.9 billion shares were traded on Tuesday, higher than the last 20-session average of 11.6 billion. Advancers outnumbered decliners on the NYSE by a 5.35-to-1 ratio. On Nasdaq, a 3.67-to-1 ratio favored advancing issues.
Investors Expect Lower Hike From Fed’s December Meet
The recent slew of economic data, media reports and comments from important Fed officials have largely indicated that the Fed is looking to loosen its grip on the extremely tight monetary policy moves it has been undertaking in its bid to bring down inflation. While it has been suggested that the decision on interest rate hike in November would be in tune of 75 bps, the Fed would also be debating when and how to start easing the planned hate hikes.
Rumors are rife that the rate of hikes might come down from the December meeting itself, and the market is weighing up whether the Fed would opt for a 50 bps hike. Coupled with the fact that officials have also suggested that the Fed might go for a total pause in hiking rates in early 2023, the market is upbeat on signs of the Fed slowing down.
Annual home prices saw their biggest monthly decline since 1987 as the Case-Shiller index for August emerged Tuesday. Both the 10-Composite and 20-Composite fell 1.6% from the previous period. The national index fell 1.1%. These numbers, which follow other soft economic data throughout last week, have acted as a catalyst to fuel the rising impression that the Fed policies have started taking effect, and would, in turn, recognize the fact and initiate ease off.
The 10-year Treasury Yield Declines
The U.S. 10-year treasury yield decreased on soft economic data, adding to the notion that the Fed might turn dovish soon. The benchmark yield lost 15 bps to close the day at 4.103% after attaining 14-year highs earlier in the week. Yields and prices are inversely related in the bond market. Yields move in inverse relation to stock prices. Lower bond yields have a positive effect on stocks because they push up the relative value of earnings from these stocks in the future.
Sectors that made most of the market doing well on rising confidence in the Fed’s policies going forward were Real Estate and Consumer Discretionaries.
Consequently, shares of Bath & Body Works, Inc. (BBWI - Free Report) and Cushman & Wakefield plc (CWK - Free Report) jumped 7% and 2.9%, respectively. Bath & Body Works carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
According to a report published by the Conference Board, Consumer Confidence for October came in at 102.5, less than the consensus of 106.3 for the period, and less than the revised September number of 107.8.
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