NEW YORK CITY, RAW – All three of Wall Street’s major indices have advanced more than one per cent as investors considered the Federal Reserve’s path for interest rate hikes and worries eased about the prospects of a Russian default after creditors received payments.
Investors on Thursday were reassured that Russia may, at least for now, have averted what would have been its first external bond default in a century.
This was because creditors received payment, in US dollars, of Russian bond coupons which fell due this week, two market sources told Reuters on Thursday.
The S&P 500, the Dow Jones Industrial Average and the Nasdaq registered their biggest three-session percentage gain since early November 2020 after the reports boosted risk appetites in a market already benefiting from bargain hunting.
The S&P 500 also witnessed its third straight day of more than one per cent advances.
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The Fed had raised interest rates by a quarter of a percentage point on Wednesday as expected and forecast an aggressive plan for further hikes while policymakers also trimmed economic growth projections for the year.
The Russian payment news and a breaking of technical decline lines “to the upside” in indices, including the S&P and the Nasdaq, all boosted stocks, according to Michael James, managing director of equity trading at Wedbush Securities.
“It’s giving investors an increased level of cautious optimism, which is a change from the significant pessimism we’ve been experiencing since early January,” James said.
“People have gotten more comfortable with the fact rates are going higher. This has been talked about ad nauseam by chairman (Jerome) Powell since early December,” he said.
“The fact there were no significant negative surprises in the Fed’s plans coming out of the meeting, and Powell’s commentary, gave people a sense that maybe we’ve seen as bad as it’s going to get in the near term.”
The Dow Jones Industrial Average rose 417.66 points, or 1.23 per cent, to 34,480.76, the S&P 500 gained 53.81 points, or 1.23 per cent, to 4,411.67 and the Nasdaq Composite added 178.23 points, or 1.33 per cent, to 13,614.78.
The energy sector was the biggest percentage gainer among the S&P’s 11 major industry sectors, ending up 3.5 per cent as oil prices rose eight per cent as the crude market rebounded from several days of losses with a renewed focus on supply shortages in coming weeks due to sanctions on Russia.
The interest rate sensitive S&P banks index ended the session slightly higher after falling two per cent earlier in the session and rallying 3.7 per cent on Wednesday. The US Treasury yield curve rebounded, after earlier reaching its flattest level in more than two years.
Earlier on Thursday, data showed weekly jobless claims fell last week as demand for labour remained strong, positioning the economy for another month of solid job gains.