Markets are recovering after a recent drop caused by the Federal Reserve, and Tuesday’s calm pre-Labor Day trading session has seen stocks rise.
The 123-point increase represents a 0.4% increase in Dow Jones Industrial AverageDJIA -0.57% futures. Futures on the S&P 500SPX -0.67% and the Nasdaq COMP -1.02% are up 0.4% and 0.6%, respectively.
After a rough couple of weeks when investors worried about the economic effect of tightening, markets are showing signs of life on Tuesday, according to Oanda’s senior market analyst, Craig Erlam.
Indeed, the last several weeks have been trying.
To start the week, the S&P 500 is down just over 6% from its mid-August top after a summer run, with losses caused by Jerome Powell’s resounding speech that put dreams for a Fed shift to rest (we hope) for good as the central bank battles inflation.
Neal Kashkari said on Monday to Bloomberg that he was “glad” to see how a selloff in the stock market met Powell’s Jackson Hole address.
Kashkari saw this as evidence that markets recognize the Fed’s determination to get inflation down to 2%.
Although this has pushed rates to a level very near their all-time highs, they have not yet broken through. With a decline of 0.028 percentage points to 3.409%, the 2-year Treasury note’s yield is trading close to a yearly high.
The dollar has fallen in tandem with the U.S. interest rate, which has halted its advance of late.
The U.S. Dollar Index is also at a multidecade high at 108, but the decline in interest rates in the United States has made fixed-income investments in the country less appealing.
This Tuesday, the stock market is showing signs of recovery thanks to the halt in interest rates and the dollar.
According to Sevens Report’s Tom Essaye, “Stock futures are enjoying a robust oversold rebound this morning” as both Treasury rates and the dollar index retreat from recent highs.
That’ll do for now, but Friday will be a test of any recovery. The August jobs data will be released by the BLS at that time.
The 318,000 predicted by economists would decrease from the 528,000 seen in July. The possibility that the Federal Reserve would ease monetary policy in response to a softening labor market might be positive for stocks.
We now live in a world where bad news is good.
On this volatile Tuesday, these stocks are rising:
After reporting profits and sales beyond Wall Street’s forecasts, shares of Baidu BIDU -0.26% (ticker: BIDU) rose by 2.8% in premarket trade.
For the quarter ending in June, the company posted profits of $2.36 per share on $4.4 billion, well above analysts’ predictions of $1.54 per share on $4.3 billion revenue.
An investor update is scheduled for tomorrow, and shares of Bed Bath & Beyond BBBY +24.77% (BBBY) have already risen by 12 percent. The shares of Gap (GPS) rose by 4.2 percent after Barclays raised its rating on the company’s stock from Underweight to Equal Weight.
After HSBC raised their recommendation on Pinduoduo (PDD) from Hold to Buy, the stock price increased by 2.4%. The shares of American Outdoor Brands (AOUT) increased by 5.5% after B. Riley Securities raised their rating on the company to Buy from Neutral.
The stock price of MakeMyTrip (MMYT) increased by 2.6 percent after Bank of America reclassified it from Neutral to Buy.