US stocks rallied on Wednesday as traders cheered better-than-expected economic data that put a damper on the idea that a recession is inevitable.
The Dow Jones Industrial Average rose 406 points, or 1.25%. The S&P 500 gained 1.46% and the Nasdaq Composite rose 2.32%, boosted by gains in technology stocks.
The comments of the chairman of the Federal Reserve of St. Louis, James Bullard, also added to the sentiment. He told CNBC Wednesday morning that he does not believe the U.S. is currently in a recession and that rate hikes to control high inflation will continue.
“We’re going to have to see compelling evidence across headlines, headlines and other measures of core inflation all coming down convincingly before we can feel like we’re doing our job,” Bullard said during a live broadcast.Squawk box” interview.
Bullard’s comments echo comments made by other Fed officials. San Francisco Fed President Mary Daly said Tuesday that the central bank’s work to control inflation is “far from over.”
“When we have a good surprise like this, it re-adjusts your thinking, which is why I think the market takes off,” said Kim Forrest, founder of Bokeh Capital Partners, adding that every day investors are thinking about whether the U.S. is in recession . “This is just more information that tells us that maybe things aren’t as bad as we anticipate.”
Traders took the anxiety out of House Speaker Nancy Pelosi visit to Taiwan could further strain already strained US-China relations. China had spent weeks warning her against the trip. Markets fell further after three Federal Reserve chairmen hinted that further rate hikes would be necessary to fight high inflation.
Traders are also anticipating another batch of second-quarter earnings. Lucid Group and Spirit report after the bell.
In economic data, this week investors will be watching the non-farm payrolls report for July, due on Friday.