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NEW YORK (AP) — U.S. stocks rose Wednesday, reversing much of their steep losses from the previous day, sparked by concerns that high interest rates could last months longer than expected.
The S&P 500 rose 47.45 points, or 1%, to 5,000.62, reversing more than two-thirds of its losses from Tuesday.a A hotter report on inflation that exceeds expectations This has forced investors to postpone their predictions of when the Federal Reserve will start cutting interest rates, potentially pushing it back into the summer. Expectations for such rate cuts are a big reason why stock prices have soared to record levels recently.
The Dow Jones Industrial Average rose 151.52 points, or 0.4%, to 38,424.27 the next day, after dropping 524 points, its worst decline in nearly 11 months. The NASDAQ Composite Stock Price Index rose 203.55 (1.3%) to 15,859.15.
Small-cap stocks, which were hit hardest by concerns about rising interest rates on Tuesday, rebounded more than the rest of the market. The Russell 2000 Index rose 2.4%.
It was the calm in the bond market that helped stabilize conditions on Wall Street. U.S. Treasury yields fell after rising a day earlier on expectations that the Federal Reserve will keep interest rates high for an extended period of time. The central bank has already raised its key interest rate to its highest level since 2001 in hopes of slowing the broader economy enough to bring high inflation down to target levels.
The yield on the 10-year U.S. Treasury note fell to 4.25% from 4.32% late Tuesday. The rate remains well above the 3.85% level at the beginning of this month.
Critics argue that the rise in stock prices since October may have been too much and too fast. JJ Kinahan, CEO of IG North America, said the rebound could be healthy if some of the “foam” can be removed from the market.
Kinahan said he found it interesting that recent big winners like Nvidia and other chipmakers ended Tuesday well above the day’s lows. For this reason, he believes that day’s decline was due to investors “taking profits rather than panic selling.”
Nvidia, which has been riding the hype around its artificial intelligence technology, rose 2.5% on Wednesday, making it the single strongest force pushing up the S&P 500 index.
DaVita soared 8.6% in one of the S&P 500’s biggest gains after the health care company reported its latest quarter’s earnings and revenue were stronger than analysts expected.
Most S&P 500 companies have outperformed analyst estimates over the past three months of 2023. Expectations for strong growth in 2024 due to a robust economy are another reason why the S&P 500 has already set 10 records this year.
lift Shares soared 35.1% after volatile after-hours trading, in part due to a typo in the company’s latest earnings report. The ride-hailing company reported stronger results than analysts expected, but also said in a press release that it expects a key measure of profitability to improve by 500 basis points (5 percentage points). It later announced that this should have been 50 basis points (0.5 percentage point).
Lyft’s stock price soared more than 60% in after-hours trading Tuesday after the typo.
Rival Uber Technologies rose 14.7% after its board approved a stock buyback program worth up to $7 billion. Investors tend to like such programs because they can send cash directly to shareholders and increase earnings per share.
Robinhood Markets rose 13% after reporting its latest quarterly earnings, despite analysts predicting a loss. The stock and cryptocurrency trading platform also announced a 24% increase in total net revenue, exceeding analyst expectations.
On the decline side, Akamai Technologies fell 8.2% after reporting mixed financial results. Profits for the latest quarter beat analysts’ expectations, but sales fell short.
Online vacation rental booking company Airbnb later fell 1.7%. Reported loss of $349 million Sales decreased in the fourth quarter due to the income tax settlement with Italy. Analysts had expected a profit.
The company expects first-quarter revenue to meet or exceed Wall Street expectations, but Airbnb said the pace of booking growth will “moderate” from the fourth quarter to the first. He said it was highly likely.
In overseas stock markets, London’s FTSE 100 index rose 0.7% after the UK’s inflation report came in better than expected.
Hong Kong’s Hang Seng index rose 0.8% as trading resumed, but markets in mainland China remained closed for the Lunar New Year holiday. Stock prices elsewhere in Asia also fell, with Japan’s Nikkei stock average falling 0.7% and South Korea’s Kospi falling 1.1%.
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AP Business writers Yuri Kageyama and Matt Ott contributed.
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