US stocks rose significantly. The Dow Jones Industrial Average officially entered a bear market on Tuesday, which is defined as a down of 20% or more from a major market index’s most recent high, as the S&P 500 fell to a new closing low.
Early in the session, the Dow Jones Industrial climbed more than 200 points, or 0.7%, while the S&P 500 increased by 1.1%. The Nasdaq Composite, which is heavily weighted in technology equities, increased by a hefty 1.5%.
Charles Evans, president of the Chicago Fed, stated at a forum in London on Tuesday that although he does not see the labor market entering “recession-like” conditions, the U.S. central bank will need to hike interest rates by at least another percentage point this year.
Wall Street is increasingly expecting an economic slump as a result of the Federal Reserve’s rate-hiking strategy to combat inflation, which is why Tuesday’s moves are taking place.
In a speech delivered last week in response to the central bank’s most recent policy statement, chair Jerome Powell repeatedly warned of some “pain.”
We don’t know whether this process will result in a recession or, if it does, how significant that recession would be, he said. He added that they had always understood that restoring price stability while achieving a relatively modest decline in unemployment and a soft landing would be very challenging.
The CBOE Volatility Index, which gauges Wall Street’s predictions for short-term market volatility, rose to its highest level since June 17 but remaining well above the crucial 30 barrier.
The 10-year Treasury yield maintained above 3.82%, the highest since April 2010, and the 2-year Treasury note at 4.2%, a 15-year high, even though Treasury yields had previously risen sharply.
The S&P 500 is expected to reach a range of 3,000–3,400 later this fall, according to Mike Wilson of Morgan Stanley, one of the most pessimistic analysts on equities. Wilson anticipates that an increase of negative earnings revisions in the coming months would drive stocks lower.
Chris Larkin, managing director of trading at E*TRADE, a subsidiary of Morgan Stanley, was more upbeat.
