Please ensure Javascript is enabled for purposes of website accessibility
Wall Street Rallies to Bounce Back From Its Worst Day in Nearly 2 Years, as Japanese Stocks Soar
gvw_ap_news
By Associated Press
Published 9 months ago on
August 6, 2024

Trader John Romolo works on the floor of the New York Stock Exchange, Tuesday, Aug. 6, 2024. (AP/Richard Drew)

Share

Getting your Trinity Audio player ready...

NEW YORK — U.S. stocks are bouncing back, and calm is returning to Wall Street after Japan’s market soared earlier Tuesday to claw back much of the losses from its worst day since 1987.

S&P Rallying by 1.6%

The S&P 500 was rallying by 1.6% in midday trading and on track to break a brutal three-day losing streak. It had tumbled a bit more than 6% after several weaker-than-expected reports raised worries the Federal Reserve had pressed the brakes too hard for too long on the U.S. economy through high interest rates in order to beat inflation.

The Dow Jones Industrial Average was up 480 points, or 1.2%, as of 11 a.m. Eastern time, and the Nasdaq composite was 1.7% higher. The vast majority of stocks were climbing in a mirror opposite of the day before, from smaller companies that need U.S. households to keep spending to huge multinationals more dependent on the global economy.

Stronger-than-expected profit reports from several big U.S. companies helped drive the market. Kenvue, the company behind Tylenol and Band-Aids, jumped 12.7% after reporting stronger profit than expected thanks in part to higher prices for its products. Uber rolled 7.9% higher after easily topping profit forecasts for the latest quarter.

Caterpillar veered from an early loss to a gain of 3.8% after reporting stronger earnings than expected but weaker revenue.

Several technical factors may have accelerated the recent swoon for markets, beyond weak U.S. hiring data and other dispiriting U.S. economic reports, in what strategists at Barclays called “a perfect storm” for causing extreme market moves. One is centered in Tokyo, where a favorite trade for hedge funds and other investors began unraveling last week after the Bank of Japan made borrowing more expensive by raising interest rates above virtually zero.

That scrambled trades where investors had borrowed Japanese yen at low cost and invested it elsewhere around the world. The resulting exits from those investments may have helped accelerate the declines for markets around the world.

Japan’s Nikkei 225 Jumped 10.2%

Japan’s Nikkei 225 jumped 10.2% Tuesday to claw back much of its 12.4% sell-off the day before, which was its worst since the Black Monday crash of 1987. Stocks in Tokyo rebounded as the value of the Japanese yen stabilized against the U.S. dollar following several days of sharp gains.

“The speed, the magnitude and the shock factor clearly demonstrate” how much of the moves were driven by how traders were positioned, according to the strategists at Barclays led by Stefano Pascale and Anshul Gupta. That could indicate it wasn’t just worries about the U.S. economy.

Still, some voices along Wall Street are continuing to urge caution.

Barry Bannister, chief equity strategist at Stifel, is warning more drops could be ahead because of a slowing U.S. economy and sticky inflation. He’s forecasting both will be worse in the second half of this year than what much of Wall Street expects, while saying a measure of how expensive the U.S. stock market is still looks “frothy” when compared with bond yields and other financial conditions.

‘Dip Not a Blip’

The stock market’s “dip is not a blip,” he warned in a report, and called it “too soon to jump back in.”

He had been predicting a coming “correction” in U.S. stock prices for a while, including an acknowledgement in July that his initial call was early. That was a couple days before the S&P 500 set its latest all-time high and then began sinking.

While fears are rising about a slowing U.S. economy, it is still growing, and a recession is far from a certainty. The U.S. stock market is also still up a healthy amount for the year so far, and the Federal Reserve says it has ample room to cut interest rates to help the economy if the job market weakens significantly.

The S&P 500 has romped to dozens of all-time highs this year, in part due to a frenzy around artificial-intelligence technology, and critics have been saying that’s sent stock prices too high in many cases.

They’ve pointed in particular to Nvidia, Apple and the other handful of Big Tech stocks in the “Magnificent Seven” that were the main reason the S&P 500 set so may records this year. Propelled in part by the mania around AI, they helped overshadow weakness across other areas of the stock market, which were struggling under the weight of high interest rates.

A set of underwhelming profit reports recently, kicked off by Tesla and Alphabet, added to the pessimism and dragged Big Tech stocks lower. Nvidia dropped nearly 19% from the start of July through Monday on such concerns, but it rose 4.8% Tuesday and was one of the strongest forces pushing upward on the market.

Apple, though, fell another 0.8% and was the heaviest weight on the S&P 500.

In the bond market, Treasury yields were ticking higher to claw back some of their sharp drops since April, driven by rising expectations for coming cuts to interest rates by the Federal Reserve.

The yield on the 10-year Treasury rose to 3.86% from 3.78% late Monday. It had briefly dropped below 3.70% during Monday when fear in the market was spiking and investors were speculating the Federal Reserve could even have to call an emergency meeting to cut interest rates quickly.

RELATED TOPICS:

DON'T MISS

What Are Fresno Real Estate Experts Predicting for 2025 and Beyond?

DON'T MISS

First California EV Mandates Hit Automakers This Year. Most Are Not Even Close

DON'T MISS

Robbie Ray’s Gem Leads the Giants Over the Rockies

DON'T MISS

Voters to Decide if Home of Elon Musk’s SpaceX Should Become an Official City: Starbase

DON'T MISS

World’s Tallest and Smallest Dogs Meet Up for a Playdate

DON'T MISS

Yamamoto Allows Only 1 Hit in 6 Scoreless Innings and Betts Homers as Dodgers Hold Off Braves 2-1

DON'T MISS

Tennessee Police Release Video of Kilmar Abrego Garcia Traffic Stop in 2022

DON'T MISS

University of Texas Chancellor Is Named President of the University of California

DON'T MISS

Here’s Why May the 4th Is Celebrated as Star Wars Day Across the Galaxy

DON'T MISS

Need a Break Without Using PTO? These Remote Rentals Are Perfect for Your Next Workcation

DON'T MISS

Lady Gaga to Draw 1.6 Million Fans to Copacabana, Boosting Brazilian Airlines and Rio’s Economy

DON'T MISS

Fresno County Authorities Search for Missing Woman Last Seen at Huntington Lake

UP NEXT

Voters to Decide if Home of Elon Musk’s SpaceX Should Become an Official City: Starbase

UP NEXT

World’s Tallest and Smallest Dogs Meet Up for a Playdate

UP NEXT

Yamamoto Allows Only 1 Hit in 6 Scoreless Innings and Betts Homers as Dodgers Hold Off Braves 2-1

UP NEXT

Tennessee Police Release Video of Kilmar Abrego Garcia Traffic Stop in 2022

UP NEXT

University of Texas Chancellor Is Named President of the University of California

UP NEXT

Here’s Why May the 4th Is Celebrated as Star Wars Day Across the Galaxy

UP NEXT

Need a Break Without Using PTO? These Remote Rentals Are Perfect for Your Next Workcation

UP NEXT

Lady Gaga to Draw 1.6 Million Fans to Copacabana, Boosting Brazilian Airlines and Rio’s Economy

UP NEXT

Fresno County Authorities Search for Missing Woman Last Seen at Huntington Lake

UP NEXT

Russian Drones Hit Apartment Block in Ukraine’s Kharkiv, 46 Hurt

Yamamoto Allows Only 1 Hit in 6 Scoreless Innings and Betts Homers as Dodgers Hold Off Braves 2-1

17 minutes ago

Tennessee Police Release Video of Kilmar Abrego Garcia Traffic Stop in 2022

20 minutes ago

University of Texas Chancellor Is Named President of the University of California

24 minutes ago

Here’s Why May the 4th Is Celebrated as Star Wars Day Across the Galaxy

28 minutes ago

Need a Break Without Using PTO? These Remote Rentals Are Perfect for Your Next Workcation

58 minutes ago

Lady Gaga to Draw 1.6 Million Fans to Copacabana, Boosting Brazilian Airlines and Rio’s Economy

16 hours ago

Fresno County Authorities Search for Missing Woman Last Seen at Huntington Lake

17 hours ago

Russian Drones Hit Apartment Block in Ukraine’s Kharkiv, 46 Hurt

17 hours ago

Trump Administration Asks Supreme Court to Let DOGE Access Social Security Systems

17 hours ago

Visalia Police to Hold DUI Checkpoint Friday

18 hours ago

Robbie Ray’s Gem Leads the Giants Over the Rockies

SAN FRANCISCO — Robbie Ray held the Colorado Rockies to two singles over seven innings and the San Francisco Giants ended a three-game losin...

2 minutes ago

2 minutes ago

Robbie Ray’s Gem Leads the Giants Over the Rockies

6 minutes ago

Voters to Decide if Home of Elon Musk’s SpaceX Should Become an Official City: Starbase

10 minutes ago

World’s Tallest and Smallest Dogs Meet Up for a Playdate

17 minutes ago

Yamamoto Allows Only 1 Hit in 6 Scoreless Innings and Betts Homers as Dodgers Hold Off Braves 2-1

20 minutes ago

Tennessee Police Release Video of Kilmar Abrego Garcia Traffic Stop in 2022

24 minutes ago

University of Texas Chancellor Is Named President of the University of California

28 minutes ago

Here’s Why May the 4th Is Celebrated as Star Wars Day Across the Galaxy

58 minutes ago

Need a Break Without Using PTO? These Remote Rentals Are Perfect for Your Next Workcation

Help continue the work that gets you the news that matters most.

Search

Send this to a friend