After ending Tuesday’s session mostly lower, stocks showed a substantial move back to the upside during trading on Wednesday. The Dow bounced off its lowest closing level in over a month, while the tech-heavy Nasdaq reached a nearly nine-month closing high.
The major averages moved roughly sideways in the final hour of trading, holding on to strong gains. The Dow jumped 408.63 points or 1.2 percent to 33,420.77, the Nasdaq spiked 157.51 points or 1.3 percent to 12,500.57 and the S&P 500 surged 48.87 points or 1.2 percent to 4,158.77.
The rebound on Wall Street partly reflected optimism lawmakers will eventually reach an agreement on raising the U.S. debt ceiling following Tuesday’s meeting between President Joe Biden and top congressional leaders.
A statement from the White House described the meeting as “productive” and said Biden is “optimistic that there is a path to a responsible, bipartisan budget agreement.”
Biden directed staff to continue to meet daily on outstanding issues, with the president cutting short an upcoming overseas trip to ensure Congress takes action by the June 1st deadline to avert default.
House Speaker Kevin McCarthy, R-Calif., told reporters following the meeting that the two sides remain “far apart” but said it is “possible to get a deal by the end of the week.”
Regional banks helped lead the rebound on Wall Street, with shares of Western Alliance (WAL) spiking by 10.2 percent after the company said deposit growth for the current quarter exceeded $2 billion as of May 12.
In U.S. economic news, the Commerce Department released a report unexpectedly showing a significant rebound in new residential construction in the month of April.
The report said housing starts jumped by 2.2 percent to an annual rate of 1.401 million in April after plunging by 4.5 percent to a revised rate of 1.371 million in March.
Economists had expected housing starts to drop to an annual rate of 1.405 million from the 1.420 million originally reported for the previous month.
Meanwhile, the Commerce Department said building permits slumped by 1.5 percent to an annual rate of 1.416 million in April after tumbling by 3.0 percent to a revised rate of 1.437 million in March.
Building permits, an indicator of future housing demand, were expected to climb to a rate of 1.430 million from the 1.413 million originally reported for the previous month.
Airline stocks moved sharply higher over the course of the session, with the NYSE Arca Airline Index soaring by 5.8 percent to a two-month closing high.
As mentioned above, substantial strength was also visible among banking stocks, as reflected by the 5.1 percent surge by the KBW Bank Index.
Steel stocks also saw significant strength, driving the NYSE Arca Steel Index up by 3.0 percent. The index bounced off its lowest closing level in almost five months.
Energy, semiconductor, and computer hardware also saw considerable strength, while gold stocks have moved to the downside along with the price of the precious metal.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index climbed by 0.8 percent, while Hong Kong’s Hang Seng Index plunged by 2.1 percent.
The major European markets also finished the day mixed. While the German DAX Index rose by 0.3 percent, the French CAC 40 Index edged down by 0.1 percent and the U.K.’s FTSE 100 Index fell by 0.4 percent.
In the bond market, treasuries turned lower over the course of the session after seeing initial strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its prices, rose by 3.2 basis points to 3.581 percent after hitting a low of 3.515 percent.
Trading on Thursday may be impacted by reaction to the latest batch of U.S. economic data, including reports on weekly jobless claims, existing home sales and Philadelphia-area manufacturing activity.
Earnings news may also attract attention, with retail giant Walmart (WMT) among the companies releasing their quarterly results before the start of trading on Thursday.
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