Stocks Rally for a Second Day, Regaining Some Lost Ground

Positive sentiment echoed around the globe, bolstered by the Reserve Bank of Australia (RBA), the country’s central bank, raising interest rates by less than expected on Tuesday, adding to the sense that other central banks might also start to slow the pace of increases.

“The move to a lesser rate hike by the RBA, alongside the weak data on job openings, has given investors a narrative that we could be setting up for a downshift to a less aggressive path of rate hikes,” said Liz Ann Sonders, chief investment strategist at Charles Schwab.

Europe’s Stoxx 600 rose 3.1 percent and the Britain’s FTSE 100 gained 2.6 percent. In Asia, Japan’s Nikkei 225 gained 3 percent.

Oil prices — a large input into measures of inflation — also continued their rally on Tuesday. The price of West Texas Intermediate crude, the U.S. benchmark, rose 3.4 percent to above $86 a barrel, building on a 5 percent gain the day before on reports of supply cuts by major energy producers.

The two-day rally for the SP 500 still leaves the index down more than 20 percent this year, after it recorded a losing streak of three straight quarters, a grim milestone not seen since 2008.

And economists remain concerned that with inflation still running well above the Fed’s target of 2 percent, the need to raise interest rates further could still tip the U.S. economy into a severe downturn.

“Central banks face a brutal trade-off in this new regime: either live with inflation, or the economic damage needed to tame it quickly,” analysts at BlackRock’s Investment Institute wrote in a recent report. “There’s no way around this.”

Article source: https://www.nytimes.com/2022/10/04/business/stocks-wall-street-rally.html