How do stock market indices trade?
The Dow Jones Industrial Average DJIA, +0.47% rose 143 points, or 0.5%, to 30,853 The S&P 500 SPX, +0.51% gained 18 points, or 0.5%, to 3,873 The Nasdaq Composite COMP, +0.38% rose 30 points, or 0.3%, to 11,454
On Tuesday, the Dow Jones Industrial Average fell 313 points, or 1.01%, to 30706, the S&P 500 fell 44 points, or 1.13%, to 3856 and the Nasdaq Composite fell 110 points, or 0.95%, to 114. What drives the markets U.S. stocks traded higher despite investors expressing concern over tightening monetary policy and heightened geopolitical tensions in Europe. “It is proving very difficult for equity markets to make headway this week with massive official rate hikes on the horizon,” wrote Ian Williams, strategist at Peel Hunt. The Federal Reserve is expected to raise its policy rate by 75 basis points to a target rate of 3.0% to 3.25% when it issues its decision at 2 p.m. east. The central bank quickly raised borrowing costs from near zero earlier in the year as it tries to fight inflation that is currently 8.3%, near multi-decade highs. “All eyes will be on the Federal Reserve’s latest inflation-busting move today as the price spiral continues to inflict financial pain on consumers and companies… There are concerns that inflation is becoming dangerously entrenched in the economy, threatening financial stability,” wrote Susannah Streeter. , senior investment and markets analyst at Hargreaves Lansdown. A sharp rise in interest rates in recent months – and the prospect of more – has sparked a sell-off in bonds and pushed benchmark Treasury yields TMUBMUSD10Y, 3.560% to 11-year highs, a move that is further weighing on stocks, in part because it makes debt assets relatively more attractive. The S&P 500 is down 18.6% so far in 2022. Correlations between bond yields, stocks, the US dollar and cryptocurrencies are at year-to-date highs, analysts at QCP Capital noted. It’s “undoubtedly a sign that liquidity (or its withdrawal) is front and center as the main driver of all markets now,” the analysts said. The expected Fed move comes after the Swedish central bank on Tuesday delivered a more dovish-than-expected 100 basis point rate hike and ahead of an expected rate hike by the Bank of England on Thursday. “Central banks are showing greater determination to fight inflation and increasingly willing to sacrifice growth to get there,” said Nathan Sheets, global chief economist at Citi. Also dampening sentiment on Wednesday was news that Russian President Vladimir Putin had called for a partial military mobilization of the country to prosecute his attack on Ukraine. The announcement, which included threats against the West, sparked fears of a further escalation of the conflict. Energy prices fell, with U.S. crude futures WTI CL.1, -1.99% down 1.2% at $83.44 a barrel and ICE Dutch gas futures TTF, the spot reference of the continent, decreased by 0.6% to 193 euros per megawatt hour. The euro EURUSD, -0.92% fell 0.9% to $0.9879, pushing the greenback near a 20-year high. In U.S. economic data, home sales in the country fell 0.4 percent in August to 4.8 million, the lowest level since May 2020, the National Association of Realtors said Wednesday. Companies in focus
Shares of General Mills Inc. GIS, +7.23% rose 7% on Wednesday after the branded consumer food company, whose brands include Cheerios, Betty Crocker and Häagen-Dazs, reported fiscal first-quarter profit that rose above expectations and raised full outlook of the year. Shares of Glatfelter Corp. GLT, -2.81% fell 5.4% on Wednesday after the engineering materials supplier said it suspended its quarterly dividend as part of a “reprioritization” of the fund as it focuses its efforts on optimizing financial results. Shares of defense companies were higher after Russian President Vladimir Putin mobilized more troops to Ukraine in what is seen as a major escalation of the war in Ukraine. Lockheed Martin LMT, +2.04% rose 2.4%, Northrop Grumman rose 2.8% and Raytheon RTX, +2.23% rose 2.5%. Beyond Meat Inc. BYND, +4.37% late Tuesday announced it had suspended Chief Operating Officer Doug Ramsey, who was arrested over the weekend and charged with allegedly biting a man’s nose during an argument in Arkansas. The maker of plant-based meat substitutes saw its shares rise 7%.
