NEW YORK: Wall Street stocks finished a roller-coaster session solidly higher on Thursday (Oct 13), reversing early losses and rallying after disappointing US inflation data.
The Dow Jones Industrial Average rose 827.87 points, or 2.83%, to 30,038.72, the S&P 500 gained 92.88 points, or 2.60%, to 3,669.91 and the Nasdaq Composite added 232.05 points, or 2.23%, to 10,649.15.
The reversal marked a jump of nearly 194 points in the S&P 500 from its low of the session to its high, the biggest intraday jump for the index since Jan 24. Financials and energy led gains among S&P 500 sectors.
The widely anticipated consumer price index (CPI) report showed inflation rose 0.4% in September from the prior month, twice the expected level and the latest indication that pricing pressures are becoming more entrenched.
Stocks tumbled immediately after the report’s release. But equities soon reversed course, working their way back into positive territory by late morning and rising from there.
The early action after the report was “knee-jerk” selling, said Briefing.com analyst Patrick O’Hare, adding that the inflation data – while disappointing – was not shocking given other recent economic reports.
The initial reversal was due to technical trading factors. When stocks refused to drop below a key trading level, they did a 180-degree turn and pushed higher.
“Maybe now there’s a bottom in place for the time being,” O’Hare said.
“People were perhaps net short going into the CPI report, and saw the report being negative and started covering their shorts,” said King Lip, chief investment strategist at Baker Avenue Asset Management in San Francisco.
Some strategists also pointed to some technical support levels around the 3,500 mark for the S&P 500.
“It’s technical factors,” Lip said, adding that the recent steep selloff in stocks may mean “bad news may have already been discounted.
“Going into earnings season, all we really need is things to be not as bad as suspected,” he said.
Big Wall Street banks kick off third-quarter reporting season today (Oct 14), with investors awaiting to see how a high interest-rate environment affects their profits.
Among individual companies, Delta Air Lines gained 4% despite reporting lower-than-expected profits as it described travel demand as still robust, enabling strong pricing.
Netflix jumped 5.3% as it announced it will debut in November a subscription streaming option subsidised by advertisements. – AFP, Reuters
Source: The Sun Daily
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