Stocks rose Wednesday — trying to shake off a three-week slide — as rates and oil prices eased, cooling investor concerns about continued high inflation.
The Dow Jones Industrial Average gained 146 points, or 0.47%, retreating from highs of the day. The S&P 500 rose 0.6% and the Nasdaq Composite ticked up 0.8%, attempting to break a seven-day losing streak.
U.S. Treasury yields dipped following a jump on Tuesday. Oil prices slumped, with West Texas Intermediate crude dipping below $85 a barrel. The British pound hit its lowest level against the dollar since 1985.
The moves higher reversed an earlier dip into negative territory in futures trading. Stock futures slumped after a Wall Street Journal article suggested that Federal Reserve Chairman Jerome Powell’s commitment to reduce inflation could mean that the central bank hikes rates by 0.75 percentage point in September, which would be the third consecutive increase of that size.
On Wednesday, the Federal Reserve will give its summary on current economic conditions, also known as the Beige Book. Elsewhere, Fed presidents Loretta Mester of Cleveland and Tom Barkin of Richmond, as well as Fed Vice Chair Lael Brainard are scheduled to speak at various events.
Markets have been hoping that the Fed would start to hand out smaller increases starting in September, but are now pricing in an 86% chance of a 0.75 percentage point hike.
Stocks have struggled recently as Treasury yields trade around their highest levels since June. On top of that, September has historically been the toughest month for the market. All eyes are on the 3,900 level on the S&P 500. Some see the index falling to even lower lows, while others are optimistic about a year-end rally.
“With equities back to June lows and the rates path reset higher, more inflation easing along with decisive EU government intervention to tackle the energy crisis could prompt another bear squeeze,” Emmanuel Cau of Barclays wrote in a Wednesday note. “Big picture, we think stocks remain in a tough spot given a poor growth-policy trade-off.”
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