US stocks closed higher on Wednesday, reversing the prior day’s losses.
After opening in negative territory, stocks turned positive around midday.
- The Dow closed sharply higher, up 257 points, or 1%.
- The S&P 500 finished 0.7% higher.
- The Nasdaq Composite closed up 0.4%.
Dow Inc (DOW) and Pfizer (PFE) were the strongest performers in the Dow. In the S&P, all sectors besides utilities were in the green.
Higher oil prices helped energy stocks higher as well. Cimarex Energy (XEC), Diamondback Energy (FANG) and Halliburton (HAL) were among the top gainers in the S&P.
Meanwhile, bond yields continued to slide and the 30-year Treasury yield slipped to a record low. The bond last yielded 1.943%. The 10-year yield stood at 1.469%.
The Dow is boasting a 250 point gain with only an hour left in the trading day.
The stock index is sharply higher, up 1%, while the broader S&P 500 is up 0.7% and the Nasdaq Composite is up 0.4%.
Although the three benchmarks are reversing Tuesday’s losses, they are looking to finish the month in the red. That would make August the second negative month of the year after May.
Investors are worried about the US-China trade war and whether or not the Federal Reserve should cut interest rates. But the biggest challenge for the United States is its dwindling working population.
“Baby boomers are retiring by the millions,” David Kelly, chief global strategist at J.P. Morgan Funds told CNN’s Alison Kosik on the digital live show Markets Now. But legal immigration could help solve that problem.
Reducing legal immigration in the face of this trend could hurt the economy.
In fact, Kelly argued that the United States should increase legal immigrants in the years to come to offset a shortage of workers.
Overall Kelly is positive about the status of the US economy, although he does believe it’s slowing.
“I think we will avoid a recession,” Kelly said, “unless we do something else wrong.”
Consumer spending is strong enough to offset weakness in the manufacturing sector, and “there’s no boom to go bust,” he said.
The inversion of the US Treasury yield curve has been in focus for some time now, as it has historically been a recession warning sign. But investors should be careful not to overreact, said Peter Tuchman, trader on the New York Stock Exchange, on the CNN digital live show Markets Now.
“The yield curve does not become predictive unless its stays there for a long enough time,” Tuchman said.
A recession isn’t necessarily happening, and, he added, even if there is one it may not be for a while.
Stocks found their footing half way through the trading session on a light news day.
All three major indexes are in the green, and the Dow is roughly 200 points stronger. No news on the US-China trade front gave the market a chance to recover from Tuesday’s selloff.
The Dow traded 0.8% higher, while the S&P 500 and the Nasdaq Composite are up 0.6% and 0.4%, respectively. The Dow has now swung nearly 350 points between its highest and lowest levels today, according to Refinitiv.
Former Treasury Secretary Larry Summers called out William Dudley, former President of the New York Federal Reserve, for saying the Fed shouldn’t “enable” President Donald Trump’s trade war.
Bloomberg published an op-ed penned by Dudley on Tuesday, saying that the Fed shouldn’t cut interest rates because that only enables the president’s trade war with China. The central bank, which operates independently from the administration, lowered rates by a quarter percentage point in July, its first such move since the financial crisis.
“This manufactured disaster-in-the-making presents the Federal Reserve with a dilemma: Should it mitigate the damage by providing offsetting stimulus, or refuse to play along?” Dudley wrote.
Trump has long been calling on the central bank to cut rates further to boost the US economy.
Dudley retired from his post at the helm of the New York Fed last year.
The pound held losses close to 0.7% after the Queen approved Prime Minister Boris Johnson’s request to suspend Parliament weeks before the October 31 Brexit deadline.
The Queen’s role in the process is mostly a formality. So it’s not surprising that there wasn’t another big drop. The pound fell as much as 1.1% earlier in the day.
From ING’s James Smith and Petr Krpata:
“It goes without saying … that the next few weeks are heading into unchartered territory. For the pound, all of this means further weakness to come.”