NEW YORK: Wall Street stocks rallied for a second straight session on Tuesday (Oct 4) amid hopes of a US monetary policy pivot, as Twitter surged on the revived chance of Elon Musk’s takeover.
The rally was broad based, with just six stocks in the S&P 500 index closing lower.
The Dow Jones Industrial Average rose 825.43 points, or 2.8%, to 30,316.32, the S&P 500 gained 112.5 points, or 3.06%, at 3,790.93 and the Nasdaq Composite added 360.97 points, or 3.34%, at 11,176.41.
The S&P 500 index posted its biggest single-day rally in two years.
After a bruising September ended another losing quarter for Wall Street, equities have soared the last two days as analysts point to hopes of moderating monetary policy.
The Reserve Bank of Australia (RBA) on Tuesday raised its policy interest rate less than expected, a 0.25 percentage point hike which was half of what had been forecast, and said that while more increases will be needed to tame inflation it wanted to pause to assess the impact of rapid moves implemented this year.
The yield on the 10-year US Treasury, a proxy for interest rates expectations, retreated further as investors bet that weakening economic data will prompt a similar pullback from the US Federal Reserve.
“Wall Street sees light at the end of the Fed rate hiking tunnel and the scramble to pick up stocks is on,” said Oanda’s Edward Moya.
The RBA is the first major central bank to recognise that now is the time to slow down after aggressively raising rates this year, said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan.
“There’s hope that the Federal Reserve at some point in the fourth quarter will say the same thing. Not stop raising interest rates, but just slow the pace,” he said. “That’s what the market’s kind of rallying on below the surface.”
Still, Fed governor Philip Jefferson said inflation is the most serious problem facing the US central bank and it “may take some time” to address. San Francisco Fed president Mary Daly said the central bank needs to deliver more rate hikes.
Among individual companies, Twitter rocketed 22.3% higher as Musk revived his buyout offer of the social media company at the original per-share price of US$54.20 (RM251.76) in a transaction that could avert a bitter court case.
Twitter confirmed receipt of Musk’s latest correspondence, and said “the intention of the company is to close the transaction at US$54.20 per share.”
Micron Technology jumped 4.3% after announcing a US$100 billion investment in a new semiconductor plant in New York in a move that was applauded by New York politicians and President Joe Biden following legislation to fund new chip plants. – AFP, Reuters
