S&P 500 surges to its best 2-day rally in 2 years
The S&P 500 posts best 2-day gains since the 2020 COVID-19 induced crash.
Wall Street is in the mix of its strongest rally in years, as slowing labour demands is adding to speculation the worst of the Federal Reserves rank hiking is over.
During last night’s trading the S&P 500 added nearly 3.1%, while the tech heavy Nasdaq Composite was up 3.3%. The Dow Jones was up 2.8% during the trading period.
This is off the back of Monday’s trading where the S&P 500 rallied 2.9%.
Tuesday’s gains mean the S&P 500 is now trading up 5.7% for the week, making it the strongest rally since the depths of the COVID-19 falls in March 2020.
According to Saxo Bank’s market strategist Jessica Amir, only 7 companies closed in the red, with retail investor favourites leading the rally.
“Tesla (TSLA) shares revved up 2.9% after Cathie Wood scooped up 132,000 more shares in the electric vehicle giant,” she said. “Telsa was among the biggest contributors to the S&P500’s gains, along with Amazon and Microsoft.”
Meanwhile Twitter shareholders enjoyed a 22% bump in the share price, after it was announced Elon Musk’s takeover deal is back on.
Why is slowing job figures a good thing for investors?
It might sound counterintuitive, but investors are actually looking for signs that the US economy is slowing down.
This is because the Federal Reserve (the Fed) is trying to tackle rampant inflation which currently sits at 8.3%.
One sign of this is a slowing demand for labour.
Overall job openings dropped 1.1 million.
But there are still 10.1 million openings on the last day of August, although this is the lowest level since mid 2021.
As it now stands, there are 1.7 job openings for every unemployed person in August, this is down from two in July. Both figures are still significantly above the historic average.
Amir highlights that the US job opening sank to a 14- month low, following weaker than expected manufacturing data.
“On top of that, softer US economic data also boosted sentiment, with the market thinking the Fed might not be as fierce with rate hikes later this month,” the analyst explains.
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