Wall Street Rebounds on Wednesday 08/12 10:18
Stocks are rebounding on Wall Street Wednesday, carrying the S&P 500 back
toward the edge of its record high.
NEW YORK (AP) -- Stocks are rebounding on Wall Street Wednesday, carrying
the S&P 500 back toward the edge of its record high.
The benchmark index was up 1.3% in morning trading and on pace for its
eighth gain in nine days. It pulled within 0.3% of its record, set in February
when the coronavirus seemed like only a far-away worry for Wall Street.
The lift followed up on gains for stocks across Europe and much of Asia,
while Treasury yields continued their sharp rally after a report on inflation
came in higher than expected for the second straight day.
The Dow Jones Industrial Average was up 258 points, or 0.9%, at 27,944 as of
10:50 a.m. Eastern time, and the Nasdaq composite was up 1.7%.
The U.S. stock market is on the edge of erasing the last of the losses taken
after the coronavirus pandemic crushed the economy into recession, even though
the economy is still hobbling despite some recent improvements.
Much of the stock market's rebound has been due to massive amounts of
support from the Federal Reserve, which has slashed interest rates to zero and
propped up far-ranging corners of the bond market to keep the economy's head
above water. The ultra-low interest rates mean investors are getting paid very
little to own bonds, which pushes some into stocks, boosting their prices.
Congress has also offered unprecedented amounts of aid, though it's hit a
seeming impasse in negotiations to re-up its assistance.
All that support has investors willing to look a few months or a year into
the future, when a vaccine for the new coronavirus will hopefully help the
economy get back to normal. More importantly for stock prices, the hope is that
corporate profits will also rebound from their current coronavirus-caused hole.
Wall Street's gains on Wednesday were widespread, with more than 80% of the
stocks in the S&P 500 higher.
Technology stocks were among the biggest forces prodding the market higher.
It's a return to form for them, following a mini-stumble in recent days.
Big tech-oriented giants like Apple, Microsoft and Amazon have been the
year's biggest winners, carrying the stock market through the pandemic despite
the worries about the economy, on expectations they'll continue to deliver
strong growth regardless of whether people are quarantined.
Tesla jumped another 7.8% Wednesday after announcing a 5-for-1 split of its
stock, in hopes of making the price of each share more affordable to investors.
The stock has surged past $1,400 after starting the year a little below $420.
The yield on the 10-year Treasury rose to 0.67% from 0.66% late Tuesday.
It's jumped sharply since sitting at 0.57% late Monday.
A report on Wednesday showed that inflation remains very low, but it ticked
up more last month than economists expected. Economists debated how much value
the report has, given that inflation is likely to remain weak as long as the
pandemic is flattening the economy.
If inflation were to reappear, it could weaken the Federal Reserve's
commitment to keeping interest rates low and could ultimately draw some
investors away from stocks.
Other risks also continue to loom over the market, including worsening
tensions between the United States and China, which are the world's largest
economies. Technology companies have been in focus in particular, and worries
about potential retaliation by China were a big reason for U.S. tech stocks'
struggles earlier in the week.
Partisan rancor in Washington is also threatening the possibility of more
assistance for the economy. A $600 weekly unemployment benefit from the U.S.
government expired with July's end, and investors say the economy needs another
big lifeline from Washington. President Donald Trump signed several executive
orders this past weekend to offer some assistance, but critics say they fall
well short of what's needed.
The recent rise in yields has also slowed the supersonic ascent for gold
recently. The metal's price has shot to record highs this year, benefiting from
increased demand by investors looking for safety amid the pandemic but not
interested in the low yields offered by bonds.
Gold for delivery in December dropped by more than $90 per ounce on Tuesday.
It clawed back a bit of that Wednesday morning, adding $4.00 to $1,950.30 per
In Europe, France's CAC 40 rose 1.1%, and Germany's DAX returned 0.9%. The
FTSE 100 in London jumped 2.1%.
In Asia, Japan's Nikkei 225 rose 0.4%, South Korea's Kospi added 0.6% and
the Hang Seng in Hong Kong gained 1.4%. Stocks in Shanghai slipped 0.6%.