NEW YORK, May 28 — Wall Street closed sharply higher yesterday as signs of peaking inflation and consumer resiliency sent investors into the long holiday weekend with growing optimism that the Federal Reserve will be able to tighten monetary policy without tipping the economy into recession.
“The market has now discounted a lot of the negative news, a lot hit all at once,” said Keith Buchanan, portfolio manager at GLOBALT in Atlanta. “Now we have absorbed that news and the actions the Fed is going to take, and we’re wrapping up earnings season.” “The signs are lining up and the boxes are being checked that we expect to develop when the market starts to form a bottom,” Buchanan added.
“It was inevitable that the losing streak would end,” said Tim Ghriskey, senior portfolio strategist Ingalls & Snyder in New York. “Corrections and bear markets are followed by ‘up’ markets.” Generally upbeat earnings guidance and solid economic indicators have fuelled hopes that the Fed’s hawkish manoeuvres to contain decades-high inflation will not cool the economy into contraction.
The Dow Jones Industrial Average rose 575.77 points, or 1.76 per cent, to 33,212.96, the S&P 500 gained 100.4 points, or 2.47 per cent, to 4,158.24 and the Nasdaq Composite added 390.48 points, or 3.33 per cent, to 12,131.13. Trading volumes were light ahead of the long weekend, with US stock markets closed on Monday in observance of Memorial Day.
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