Wall Street Jumps in Falling Buys Rally, Oil Slides

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NEW YORK – U.S. stocks rose sharply on Thursday, fueled by a rebound in mega-cap growth stocks, while crude oil prices fell as a surge in COVID cases in China heightened fears of a global economic slowdown.

All three major U.S. stock indexes surged in a broad-based rally, with the tech-heavy Nasdaq leading the pack. These gains were spurred by an increase in jobless claims in the United States, suggesting that the Federal Reserve’s hawkish monetary policy is having the desired effect.

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The S&P and Nasdaq were on course for their biggest one-day percentage gains in a month.

« 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. »

Rising COVID-19 cases in China, following Beijing’s easing of its pandemic-fighting restrictions, have soured risk appetite elsewhere, putting pressure on the dollar and weighing on prices. crude.

Concerns over a looming global recession preoccupied investors on the penultimate trading day of 2022, a year in which central banks’ decades-long battle with searing inflation and Russia’s war on Ukraine have helped push the three major equity indices to their largest annual percentage losses since 2008, the low point 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. »

An uptick in U.S. jobless claims and a sharp drop in eurozone business loans proved that the hawkish monetary policies of the Fed and the European Central Bank are successful in reducing demand in order 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 389.63 points, or 1.19%, to 33,265.34, the S&P 500 gained 69.81 points, or 1.85%, to 3,853.03 and the Nasdaq Composite added 265.44 points, or 2.6%, to 10,478.73.

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European stocks followed their U.S. counterparts higher, but gains were dampened by concerns about surging COVID cases in China, the world’s second-largest economy.

The pan-European STOXX 600 index rose 0.68% and the MSCI gauge of stocks across the world gained 1.34%.

Emerging market stocks lost 0.29%. MSCI’s broadest index of Asia-Pacific stocks outside Japan closed down 0.46%, while Japan’s Nikkei lost 0.94%.

Benchmark Treasury yields softened after three straight days of gains in the wake of U.S. jobless claims data.

Ten-year notes rose 13/32 to 3.8391% from 3.886% late Wednesday.

The 30-year bond rose 31/32 to 3.923% 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 0.57%, with the euro up 0.64% at $1.0676.

The Japanese yen strengthened 1.14% against the US currency to 132.96 to the dollar, while the pound last traded at $1.2066, up 0.44 % 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 surged, boosted by the weakness of the dollar.

Spot gold added 0.8% to $1,817.67 an ounce.

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