Wall Street jumps in buying rally down, oil drops

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NEW YORK, December 29 (Reuters) –

US stocks closed sharply higher on Thursday, fueled by a rebound in recently beaten mega-cap growth stocks, while crude oil prices fell as a spike in COVID cases in China heightened fears of a global economic slowdown.

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All three major U.S. stock indexes surged in a broad-based rally on the penultimate trading day of the year, with the tech-heavy Nasdaq leading the way.

European stocks also rose, but gains were dampened by concerns over rising COVID cases in China, the world’s second-largest economy.

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The S&P 500, up 1.7% and the Nasdaq, up 2.6%, posted their biggest one-day percentage gains in a month, boosted as rising unemployment claims in the US United suggested that the Federal Reserve’s interest rate hikes had had the desired effect.

« It’s nice to see some green on the screen, » said Terry Sandven, chief equity strategist at US Bank Wealth Management in Minneapolis. « Stocks are trending higher as investors look to end 2022, while approaching 2023 with renewed optimism. »

A surge in COVID-19 cases in China, following Beijing’s easing of its pandemic-fighting restrictions, dampened risk appetite elsewhere, putting pressure on the dollar and weighing on oil prices. raw.

As central banks raise interest rates to fight inflation and the war in Ukraine rattles global markets, worries about the global recession have preoccupied investors this year. Wall Street’s three major stock indices are posting their biggest annual percentage losses since 2008, the nadir of the global financial crisis.

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“While macro headwinds remain, there are reasons for optimism,” Sandven added. « Valuations have been reset lower, implying an improving risk-reward profile, particularly among growth-oriented sectors. »

A sharp decline in Eurozone corporate lending provided further evidence that rate hikes by the Fed and the European Central Bank are succeeding in reducing demand to calm inflation.

« Performance in 2022 has been largely impacted by the duration and depth of inflation, » Sandven said. « 2023 will be all about the depth and duration of the recession. »

The Dow Jones Industrial Average rose 345.09 points, or 1.05%, to 33,220.8, the S&P 500 gained 66.06 points, or 1.75%, to 3,849.28 and the Nasdaq Composite added 264.80 points, or 2.59%, to 10,478.09.

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The pan-European STOXX 600 index rose 0.68% and the MSCI gauge of stocks across the world gained 1.26%.

Emerging market stocks lost 0.28%. MSCI’s broadest index of Asia-Pacific stocks outside Japan closed down 0.52%, while Japan’s Nikkei lost 0.94%.

U.S. jobless claims data sent bond market prices higher and benchmark Treasury yields fell after three days of gains. Ten-year notes rose 15/32 to 3.8296% from 3.886% late Wednesday.

The 30-year bond rose 36/32 to 3.9142% from 3.977% late Wednesday.

The dollar lost ground against a basket of global currencies after jobless claims data suggested some easing in the tight labor market, although optimism about the reopening of Beijing’s eased COVID restrictions was dimmed. mitigated by a wave of new COVID cases there.

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The dollar index fell 0.54%, with the euro up 0.53% at $1.0664.

The Japanese yen strengthened 1.12% against the US currency to 133.00 to the dollar, while the pound last traded at $1.2065, up 0.43 % over the day.

Crude oil prices fell on uncertainties surrounding the wave of COVID infections in China, but its losses were kept under control by strong US demand.

U.S. crude fell 0.7% to settle at $78.40 a barrel, while Brent settled at $82.26 a barrel, down 1.2% on the day.

Gold rose, supported by the weakness of the dollar.

Spot gold added 0.6% to $1,814.94 an ounce.

(Reporting by Stephen Culp, additional reporting by Elizabeth Howcroft in London; Editing by Emelia Sithole-Matarise, Chizu Nomiyama and David Gregorio)