Shares rose in afternoon trading on Wall Street on Wednesday after the market’s worst day in two years on fears of higher interest rates and a recession they could cause.
The S&P 500 was up 0.4% as of 12:01 p.m. Eastern. The benchmark index is coming in with its biggest fall since June 2020, ending a four-day winning streak.
The Dow Jones Industrial Average rose 65 points, or 0.2%, to 31,174 and the Nasdaq rose 0.7%.
Energy stocks were some of the biggest gainers as US crude oil prices rose 2.2%. Exxon Mobil rose 3.2%.
Bond yields remained relatively stable after the bounce on Tuesday. The yield on the two-year Treasury rose to 3.76% from 3.75% late Tuesday, when it climbed on expectations of a more aggressive interest rate hike by the Federal Reserve.
The yield on the 10-year Treasury, which helps determine where mortgages and rates for other loans are heading, rose from 3.41% to 3.40%.
A report on inflation at the wholesale level shows that prices are still rising sharply, with pressure building under the surface even as overall inflation slows. This echoed a report on inflation at the consumer level on Tuesday, which raised expectations of a hike in interest rates and began a rout for markets.
Traders now have a one in three chance that the Fed could raise its benchmark rate by a full percentage point next week, quadruple the usual move. The central bank has already raised its benchmark interest rate four times this year, an increase of three-quarters of a percentage point in the past two.
The Fed is aggressively taking interest rates to quell the hottest inflation in four decades. Tuesday’s report on higher prices shocked the market with signs that inflation is entering a more stubborn phase that may require the already determined Fed to become more aggressive.
Wall Street is particularly concerned that rate hikes could go too far in slowing the economy and sending it into recession. The Fed is trying to avoid that outcome, but the latest inflation report shows it’s becoming an even more difficult task.
The broader US economy has slowed, but consumers remain resilient and the job market remains strong. Wall Street will get another update on the latest impact on inflation spending when the government releases its retail sales report for August on Thursday.
Markets are also monitoring US-China tensions and war in Ukraine, while business and government officials prepare for the possibility of a nationwide rail strike later this week that could cripple an already disrupted supply chain.
The railroad has already started reducing shipments of hazardous materials and announced plans to stop carrying refrigerated products before Friday’s strike deadline. Businesses that rely on the Norfolk Southern, Union Pacific, BNSF, CSX, Kansas City Southern and other railroads to distribute their raw materials and finished products are planning the worst.
Union Pacific fell 4.7% and Norfolk Southern 2.3%.
Officials in the Biden administration are scrambling to develop a plan to move cargo when the railroad is closed. The White House is also pressing both sides to settle their differences, and a growing number of business groups are lobbying Congress to intervene and call off a strike if they cannot reach an agreement. .
This story has been published without modification in text from a wire agency feed.
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