Wall Street jumps, technicals help market rebound

  • Stocks reverse course after morning drop
  • Headline CPI rise for September more than expected
  • Indexes up: Dow 3.1%, S&P 2.7%, Nasdaq 2.2%

NEW YORK, Oct 13 (Reuters) – U.S. stocks rallied in late afternoon trading Thursday as investors covered short positions after a disappointing consumer prices report and as technical support helped drive a rebound.

The Dow was up more than 3% while the S&P 500 and Nasdaq were up more than 2% each, with energy (.SPNY) and financials (.SPSY) leading gains among S&P sectors.

Markets were sharply lower earlier in the day after the headline consumer price index rose at an annual pace of 8.2% in September, compared with an estimated 8.1% rise. read more

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Core CPI, which excludes volatile food and fuel prices, gained 6.6% last month, compared with estimates of a 6.5% rise. The reading was much higher than a 6.3% rise in August.

“People were perhaps net short going into the CPI report, and saw the report being negative and started covering their shorts,” said King Lip, chief investment strategist at Baker Avenue Asset Management in San Francisco.

Some strategists also pointed to some technical support levels around the 3,500 mark for the S&P 500.

The Dow Jones Industrial Average (.DJI) rose 901.92 points, or 3.09%, to 30,112.77, the S&P 500 (.SPX) gained 97.37 points, or 2.72%, to 3,674.4 and the Nasdaq Composite (.IXIC) added 233.13 points, or 2.24%, to 10,650.23.

“It’s technical factors,” Lip said, adding that the recent steep selloff in stocks may mean “bad news may have already been discounted.

“Going into earnings season, all we really need is things to be not as bad as suspected,” he said.

Big Wall Street banks kick off third-quarter reporting season on Friday, with investors awaiting to see how a high interest-rate environment affects their profits.

Walgreens Boots Alliance Inc (WBA.O) rose following better-than-estimated fourth-quarter results. read more

Advancing issues outnumbered declining ones on the NYSE by a 2.17-to-1 ratio; on Nasdaq, a 2.09-to-1 ratio favored advancers.

The S&P 500 posted three new 52-week highs and 172 new lows; the Nasdaq Composite recorded 38 new highs and 581 new lows.

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Additional reporting by Bansari Mayur Kamdar, Ankika Biswas and Shreyashi Sanyal in Bengaluru; Editing by Saumyadeb Chakrabarty, Anil D’Silva, Arun Koyyur and Deepa Babington

Our Standards: The Thomson Reuters Trust Principles.

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