Wall Street ends worst quarter in four years with a rally

Reuters | Updated on January 22, 2018 Published on October 01, 2015

US stocks had closed sharply higher on Wednesday as investors sought bargains among beaten-down stocks and the recently battered biotechnology index bounced back on the last day of Wall Street’s worst quarter since 2011.

For much of the third quarter, global markets were rocked by fears of slowing growth in China and uncertainty over the timing for a US Federal Reserve hike of interest rates. Biotech had a seven-day selloff kicked off by drug price regulation worries.

“I don’t think there was a specific piece of news driving the market today. We got very oversold,’’ said Brian Fenske, head of sales trading at ITG in New York. “When everybody gets bearish quickly, you tend to get these bounces.”

Investment strategists and traders said it was too soon to expect Wednesday’s rally to be sustainable. However, instead of trying to bet on the rate hike timing, Fenske said that investors will now focus on economic data and look ahead to the third-quarter earnings season, which begins next week.

The Dow Jones industrial average rose 235.57 points or 1.47 per’cent to 16,284.7, the S&P 500 gained 35.94 points or 1.91 per cent to 1,920.03, and the Nasdaq Composite added 102.84 points or 2.28 per cent to 4,620.17.

For the quarter, the Dow fell 7.6 per cent, the S&P lost 6.9 per cent and Nasdaq fell 7.4 per cent. For September, the Dow fell 1.5 per cent while the S&P dropped 2.6 per cent and Nasdaq fell 3.3 per cent.

Trading was heavy on Wednesday with 8.52 billion shares changing hands on US exchanges, above the 7.28 billion average for the previous 20 sessions, according to Thomson Reuters data.

The Fed has said it needs to see more improvement in the labour market and be confident that inflation will increase before raising rates for the first time since 2006. Inflation remains below the Fed’s 2-per cent target.

Yellen had said last week the central bank remained on track to raise rates this year. The Fed meets next on October 27-28.

Data on Wednesday showed the US private sector added more jobs than expected in September, raising hopes for a strong reading in the government's payrolls report due Friday.

All 10 S&P sectors were higher, with the consumer discretionary index's 2.7 per cent rise leading the gains.

The Nasdaq biotechnology index closed up 4.5 per cent as investors sought bargains in the sector, but was still down 11.5 per cent for the month after Democratic presidential candidate Hillary Clinton had criticised drug pricing last week.

Although the market's recent rout has forced many strategists to slash expectations, a Reuters poll showed the S&P 500 is expected to end 2015 roughly 11 per cent above the current levels.

Advancing issues outnumbered declining ones on the NYSE by 2,340 to 758, for a 3.09-to-1 ratio; on the Nasdaq, 2,063 issues rose and 783 fell for a 2.63-to-1 ratio favouring advancers.

The S&P 500 posted 3 new 52-week highs and 18 new lows; the Nasdaq recorded 22 new highs and 179 new lows.

Published on October 01, 2015
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