US stocks rose on Wednesday, erasing losses after a morning marked by large pullbacks across all sectors.
Equity trading has been bumpy lately as investors grapple with soaring energy prices and a general upward movement in government bond yields. The market opened lower, looking ready to nibble on Tuesday’s rebound. In the hours that followed, however, stocks managed to rally, with shares of utilities, real estate and consumer staples companies among the top performing groups on the S&P 500.
The S&P 500 finished up 17.83 points, or 0.4%, at 4,363.55. The Dow Jones Industrial Average gained 102.32 points, or 0.3%, to 34,416.99. The tech-focused Nasdaq Composite Index rose 68.08 points, or 0.5%, to 14,501.91.
It is not uncommon to see stocks swing between gains and losses. In fact, most of the big breakthroughs in the stock market this year have come as a result of large losses, according to an analysis by Frank Cappelleri, office strategist at Instinet. Stocks fell early in the week, but major indices rose the next day, giving the S&P 500 its 25th gain of at least 1% for the year.
Mr Cappelleri added that he would not be surprised to see more choppy trade actions in the last quarter of the year.
Investors are currently assessing several issues. Oil and gas prices have jumped, which some analysts say could fuel inflation further. Meanwhile, investors have had to contend with rising bond yields, which can push down tech stocks, whose future earnings are typically worth less in today’s currency when discount rates rise.
Tech stocks have been among the main drivers of the overall market gains in recent years. Their collapse at the end of the third quarter contributed to unease among some investors and analysts, adding to questions about the ability of markets to hold their position in the final months of 2021.
“At what point do central banks have to say, wait, two years, maybe that requires some policy adjustment?” Said Jane Foley, head of currency strategy at Rabobank. She pointed the finger at the Bank of England, which said it could hike rates in the coming months as energy price inflation rises.
Business news caused swings among individual stocks on Wednesday.
American Airlines shares fell 93 cents, or 4.3%, to $ 20.54 and JetBlue Airways fell 43 cents, or 2.7%, to $ 15.69 after Goldman Sachs analysts said lowered their ratings for both stocks, citing concerns over fuel costs and slower economic growth slashing airline profits.
Other airlines also fell, with Delta Air Lines down 72 cents, or 1.6%, to $ 44.02 and United Airlines down 66 cents, or 1.3%, to $ 50.22 .
Meanwhile, Palantir Technologies jumped 37 cents, or 1.6%, to $ 23.58 after it said it won a data and analytics contract with the U.S. military.
PepsiCo shares climbed $ 3.87, or 2.6%, to $ 154.96, extending gains after raising its forecast for the full year on Tuesday.
Government bond yields were little changed on Wednesday, although they remained close to recent highs.
The yield on the 10-year US Treasury bill was 1.524%, down from 1.528% on Tuesday. Yields rise as bond prices fall.
Abroad, the markets retreated.
The Stoxx Europe 600 slipped 1%, dragged down by shares of travel, leisure and retail companies. Aircraft maker Airbus and Jeep owner Stellantis fell 1.3% and 3.3% respectively.
Hong Kong’s Hang Seng fell 0.6% to its lowest level since October 2020.
On the commodity markets, natural gas prices have soared. Oil prices retreated but remained a striking distance from multi-year highs.
Forecasts of colder weather and weak gas flows from Russia have caused the latest wave of natural gas price volatility, said Nick Boyes, senior analyst at Swiss energy producer and trader Axpo. Thin trading conditions also helped, traders and analysts said, as some companies faced margin calls and others ran into their credit limits.
Contracts for West Texas Intermediate, the leading grade of U.S. crude, fell 1.9% to $ 77.43 per barrel, breaking a four-session streak of gains and moving further away from the $ 80 mark. barrel. WTI prices have not exceeded $ 80 per barrel intraday since November 2014.
Fluctuations in energy prices were reflected in European government bond markets. The yield on UK 10-year gilts climbed to 1.152% from 1.093% on Tuesday, before retreating. The UK is exposed to the global gas shortage because it has minimal amounts of fuel in storage.
Copyright © 2021 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8