Wall Street closes with sharp gains as final quarter begins

  • US factory activity slowest in ~2.5 years in September -ISM
  • Credit Suisse and Citi cut their 2022 year-end target for the S&P 500
  • Dow, S&P 500, Nasdaq up

Oct 3 (Reuters) – Shares on Wall Street closed strong on Monday at the start of the final quarter of a tumultuous year with interest rate hikes amid historically high inflation and fears of a slowing economy. Economic Growth.

All 11 major S&P 500 (.SPX) advanced sectors in positive territory, with energy (.SPNY) being the biggest winner.

Data showed manufacturing activity grew at its slowest pace in nearly 2½ years in September as new orders contracted, likely as interest rates hiked to rein in inflation. dampened demand for goods. Read more

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The Institute for Supply Management said its manufacturing PMI fell to 50.9 this month, missing estimates but still above 50, indicating growth.

“The flow of economic data has actually been worse than expected. In a very counter-intuitive way, which is probably good news for equity markets,” said Art Hogan, chief market strategist at B. Riley. Wealth in Boston.

“(While) good economic data, good readings were a catalyst for the sell off, this is the first time we’ve actually seen negative news be a catalyst.”

Further supporting rate-sensitive growth stocks, the benchmark 10-year US Treasury yield fell after British Prime Minister Liz Truss was forced to reverse a tax cut for the top rate.

“US yield markets (are) pulling back – that’s been positive … and that implies a riskier environment,” Hogan said.

All three major indexes ended a volatile third quarter lower on Friday on growing fears that the Federal Reserve’s aggressive monetary policy could tip the economy into recession.

According to preliminary data, the S&P 500 (.SPX) gained 92.81 points, or 2.54%, to finish at 3,678.43 points, while the Nasdaq Composite (.IXIC) gained 235.42 points, or 2.23%, to 10,811.04. The Dow Jones Industrial Average (.DJI) rose 764.52 points, or 2.63%, to 29,480.41.

Citigroup and Credit Suisse have become the latest brokerages to lower their 2022 year-end targets for the S&P 500 as U.S. stock markets feel the heat from aggressive central bank actions to rein in inflation. Read more

Credit Suisse also set a 2023 year-end price target for the benchmark at 4,050 points, adding that 2023 would be a “year of low, non-recessionary growth and falling inflation.”

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Reporting by Echo Wang in New York; Additional reporting by Ankika Biswas and Bansari Mayur Kamdar in Bengaluru; Editing by Anil D’Silva, Arun Koyyur and Richard Chang

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