Wall Street closes with sharp gains as final quarter begins

Wall Street closes with sharp gains as final quarter begins
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  • Tesla slumps as third-quarter deliveries miss market forecasts
  • US factory activity slowest in ~2.5 years in September -ISM
  • Credit Suisse and Citi lower their 2022 year-end target for the S&P 500
  • Indices up: Dow 2.66%, S&P 500 2.59%, Nasdaq 2.27%

October 3 (Reuters) – Three of Wall Street’s major indexes closed more than 2 percent on Monday as U.S. Treasuries tumbled on weaker-than-expected manufacturing data, boosting the appeal of equities at the start of the last quarter of the year.

The US stock market has fallen for three straight quarters in a tumultuous year marked by interest rate hikes and concerns about a slowing economy to rein in historically high inflation.

“US yield markets are pulling back – it’s been positive … and that evokes a riskier environment,” said Art Hogan, chief market strategist at B. Riley Wealth in Boston.

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Further supporting rate-sensitive growth stocks, the benchmark US 10-year Treasury yield fell after British Prime Minister Liz Truss was forced to reverse course in a tax cut for the top rate.

All 11 major S&P 500 (.SPX) sectors moved into positive territory with energy (.SPNY) to be the biggest winner.

Oil giants Exxon Mobil Corp. (XOM.N) and Chevron Corp rose more than 5% following a jump in crude oil prices as sources said the Organization of the Petroleum Exporting Countries and its allies are considering the biggest production cuts since the start of the COVID-19 pandemic.

megacap growth and tech companies like Apple Inc (AAPL.O) and Microsoft Corp. (MSFT.O) <.SPXBK> banks rose 3%, respectively, increased by over 3%.

The data showed manufacturing activity rose at its slowest pace in about 2-1/2 years in September as new orders contracted and rising interest rates cooled demand for goods, possibly to curb inflation. Read more

The Institute for Procurement Management said manufacturing PMI fell to 50.9 this month, with forecasts incomplete but still above 50, which signals growth.

“The economic data flow actually came in worse than expected. In a very illogical way, which probably represents good news for the stock markets,” Hogan said.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, September 26, 2022. REUTERS/Brendan McDermid

“(Good economic data, while strong readings are a catalyst for sales, this is the first time we’ve seen some negative news be a catalyst.”

All three major indices closed down a volatile third quarter on Friday amid growing fears that the Federal Reserve’s aggressive monetary policy will plunge the economy into recession.

Dow Jones Industrial Average (.DJI) an increase of 765.38 points or 2.66% to 29,490.89; S&P 500 (.SPX) earned 92.81 points, or 2.59%, out of 3,678.43; and the Nasdaq Composite (.IXIC) At 10,815.44 it added 239.82 points, or 2.27%.

Volume on US exchanges was 11.61 billion shares, compared to an average of 11.54 billion for the full session over the last 20 trading days.

Tesla Inc. (TSLA.O) It fell 8.6% after selling fewer vehicles than expected in the third quarter as deliveries fell far behind production due to logistical barriers. Peers Lucid Group (LCID.O) 0.9% and Rivian Automotive won (RIVN.O) It fell 3.1%. Read more

Major automakers are expected to report modest declines in new vehicle sales in the US, but analysts and investors are worried that a darkening economic picture, not inventory shortages, will lead to weaker auto sales. Read more

Citigroup and Credit Suisse are the latest brokerages to cut their 2022 year-end targets for the S&P 500 as US equity markets heat up on aggressive central bank actions to curb inflation. Read more

Credit Suisse set the end-of-year 2023 price target for the benchmark index as 4,050 points, adding that 2023 will be “a year of weak, unsteady growth and falling inflation”.

Advancing issues outpaced those that fell 5.04 to 1 on the NYSE; With a 2.70 to 1 ratio, the Nasdaq was in favor of the progressives.

S&P 500 posts new 52-week high and 23 new lows; The Nasdaq Composite records 58 new highs and 282 new lows.

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Report by Echo Wang in New York; Additional reporting in Bengaluru by Ankika Biswas and Bansari Mayur Kamdar; Editing Anil D’Silva, Arun Koyyur and Richard Chang

Our standards: Thomson Reuters Trust Principles.

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