US stocks power higher at the close, Dow Jones gains over 400 points

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4.10pm: US markets post hefty gains at the close

US markets closed sharply higher on Wednesday as oil prices prices fell cooling concerns about continued high inflation and as investors took heart from comments by Federal Reserve vice chair Lael Brainard.

At the close the Dow Jones Industrial Average was up 1.40% or by 436.35 points at 31,581.65, the S&P 500 was up 1.83% or 71.69 points at 3,979.87 while the Nasdaq Composite was up 2.14%, or 246.99 points at 11,791.90.

Brainard reaffirmed that the central bank would do what it takes to stifle inflation, while also noting the risks of going too far.

Many traders decided to focus on this latter point from her speech.

“At some point in the tightening cycle, the risks will become more two-sided,” Brainard said.

“The rapidity of the tightening cycle and its global nature, as well as the uncertainty around the pace at which the effects of tighter financial conditions are working their way through aggregate demand, create risks associated with overtightening.”

12.05pm: US indices turn positive

The major US indices saw an effort by Wall Street to shake off a three-week losing streak, including a seven-day slide by the Nasdaq Composite.

At midday, the Dow Jones Industrial Average was up 0.72% or by 225 points to 31,371, the S&P 500 was up by 0.9% at 3,943, while the Nasdaq Composite was up by 1.05% at 11,665.

Chris Beauchamp, chief market analyst at online trading platform IG, said the US Federal Reserve chair Jerome Powell’s talk about interest rate policy changes is failing to dent the markets.

“It is beginning to look like markets have stopped moving to the downside for now, and that a short-term bounce could play out from here. Widespread investor bearishness suggests that a squeeze of some sort could be in the making, and it is notable that Powell’s hints about another 75 basis points rise have not prompted a fresh selloff in stocks,” Beauchamp said in a statement.

At midday, the major movers included Solaredge Technologies, up by 6.6%, and Twitter up by 5.3% on news that a Delaware court has denied Elon Musk’s move to delay the trial over his withdrawn deal to buy the social media company.

On the downside, Gamestop – expected to report second quarter earnings after market close – slid by 6.6%.

11.46am: Proactive North America headlines:

Majuba Hill reports impressive copper equivalent values from its flagship porphyry copper project in Nevada

Murchison Minerals hits extensive sulphide mineralization at BDF zone on its HPM project in Quebec

Sidus Space shares skyrocket as company inks multiple launch agreement with SpaceX for LizzieSat satellites

Altamira Gold reveals new gold discovery at its Cajueiro project in Brazil

MGX Minerals finishes geophysical exploration at GC lithium pegmatite claims in BC

Reunion Gold poised to accelerate drilling at Oko West project given recent success

Marble Financial offers update on binding letter of intent to acquire eBunch Data and Development

CleanSpark buys 10,000 more latest generation bitcoin mining machines; extends summer of acquisitions

G Mining Ventures closes US$116M funding package to fund construction of Tocantinzinho gold project in Brazil

Gungnir Resources reports promising assay results from three drill holes at Lappvattnet nickel deposit in Sweden

Gratomic announces progress update on benching program at its Aukam project in Namibia

Rio2 updates on Fenix gold EIA; files appeal

BetterLife Pharma and collaborators to submit key joint research on BETR-001 to publication

Playgon Games (TSX-V:DEAL, OTCQB:PLGNF) inks software license and distribution deal with Pariplay

BANXA Holdings deepens push into US market with new payment solutions and Reno-based team

Infinity Stone Ventures expands its land position in the James Bay lithium district in Quebec

SPC Nickel posts more encouraging drill results from its Lockerby East project in Sudbury, Ontario

Hapbee Technologies launches ‘Routines By’ featuring wellness routines developed and shared by Hapbee users

Mindset Pharma files 16 national patent applications to protect family of novel next-generation psychedelics

PyroGenesis Canada awarded additional projects for magnesium processing

Lavras Gold hits ‘bonanza’ gold grades from first drilling at Zeca Souza target at Lavras do Sul project

Jushi Holdings debuts cannabis-infused chocolates; marks entry into edibles market

GR Silver Mining (TSX-V:GRSL) hails latest drill results, which show resource expansion potential at San Marcial area of Plomosas

Ortho Regenerative Technologies announces name change to ChitogenX

Delta 9 Cannabis completes acquisition of three retail cannabis stores in Manitoba

Alkaline Fuel Cell Power says Belgium subsidiary earns ISO certification

Givex Information Technology launches point of sale system for three hotels in Mexico

Endexx says its Blesswell premium skincare line for men is now available via Amazon.com

Standard Uranium plans to conduct a non-brokered private placement to raise gross proceeds of up to C$3.5M given the current strength of the global uranium sector

9.35am: More equity losses expected

US stocks opened mixed on Wednesday following a Wall Street Journal report that a 75 basis point rate hike by the Federal Reserve later this month is likely.

Just after the open, the Dow Jones Industrial Average had dipped 13 points at 31,132 points.

The S&P 500 was up 3 points at 3,911 points and the Nasdaq Composite had gained 34 points at 11,579 points.

CityIndex and FOREX.com market analyst Fawad Razaqzada said sentiment towards equities, bonds, cryptos, metals, and foreign currencies remained negative.

“Investors appear reluctant to buy anything in this macro environment, where inflation is soaring, global growth is weakening, and central banks are tightening,” he said.

“Also not helping is the fact we are in a bear market, where traders are happy to sell into the rallies than buy the dips. At this stage, there are not many technical or indeed fundamental signs to appease the bulls. So, expect more losses for equity markets.”

6:30am: Fleeting relief?

US stocks were expected to open slightly higher on Wednesday following sharp recent falls as investors ponder the prospect for more interest rate hikes, elevated levels of inflation, and a stronger dollar.

Futures for the Dow Jones Industrial Average were trading flat pre-market, while those for the broader S&P 500 index were up 0.1%, and futures for the tech-laden Nasdaq-100 were 0.2% higher.

The three major US indices fell on Tuesday, US bond yields spiked and the dollar extended its rally, as Americans returned from their Labor Day break, noted Ipek Ozkardeskaya senior analyst at Swissquote Bank.

“The S&P 500 closed a couple of points above the closely watched 3900 mark, the major Fibonacci 61.8% retracement on the summer rally, which, if cleared should point at a deeper bearish trend in the medium run,” she added.

The US Federal Reserve’s recent series of interest rate increases and its determination to fight inflation with more rate hikes have kept investors on edge as they fear that economic activity in the world’s biggest economy will start to waver. While economic data, especially in the labor market, continue to hold up well, many expect headline figures to soften over the coming months.

These factors are putting equities under pressure although each bout of selling is likely to be tempered by a spot of bargain hunting in US markets, especially as investors look to avoid turbulence in global markets. 

Ozkardeskaya pointed out that the equity sell-off has deepened as US companies rush to sell bonds before it gets more expensive. 

She noted: “Yesterday alone, 19 US companies including big names like Nestle, Walmart, Target and McDonalds issued a large amount of bonds – about $30 to $40 billion – following an almost 60bp point jump in high-grade yields since the beginning of August. That’s the largest amount sold since September last year.”

The demand for bonds pushed the US 2-year Treasuries yield above 3.50%, and the 10-year yield above 3.35% for the first time since mind-June, she added.

Contact the author at jon.hopkins@proactiveinvestors.com