‘Oversold’ US stocks bounce back after early weakness

NEW YORK: Wall Street stocks bounced on Thursday (March 2) in a round of bargain-hunting after a recent selloff, in spite of worries over tightening monetary policy.

Shaking off early weakness following eurozone inflation data, US equities forged higher in one of the most upbeat sessions in weeks.

“The market was just primed to bounce after steady selling in February and early March,” said Briefing.com analyst Patrick O’Hare.

He added that the rally was supported by the ability of the S&P 500 to hold above a key technical level, and comments from Atlanta Federal Reserve (Fed) president Raphael Bostic favouring a quarter-point interest rate increase at the central bank’s next meeting.

“Bostic has been a little bit more hawkish so the fact that he basically said 25 was comforting because he has been on the hawkish end of hawkish people,” said Rhys Williams, chief strategist at Spouting Rock Asset Management in Bryn Mawr, Pennsylvania.

“The Fed is not crazy, they understand monetary policy works with a lag, so you are just starting to see now the impact of the first rate hikes, let alone the other 400 basis points they did.”

The Dow Jones Industrial Average rose 341.73 points, or 1.05%, to 33,003.57, the S&P 500 gained 29.96 points, or 0.76%, to 3,981.35 and the Nasdaq Composite added 83.50 points, or 0.73%, to 11,462.98.

The gains came despite another rise in the 10-year US Treasury note following eurozone inflation data.

Inflation in the eurozone came in at 8.5% in February, according to official figures.

This was above expectations and prompted European Central Bank president Christine Lagarde to caution that additional interest rate inreases may be needed.

Among individual companies, Salesforce surged 11.5% as the technology giant announced it was boosting its share repurchase programme to US$20 billion (RM88.95 billion), after better-than-expected results.

Tesla slumped 5.9% after the company’s investor day offered few clues on the timing or design of future vehicles.

Analysts had been hoping for an auto priced at around US$25,000 to compete with upcoming products from other automakers.

Retailer Best Buy dropped 2.1% as it reported a 9.3% decline in comparable sales in the fourth quarter, while cautioning that the macro backdrop remains “pressured”. – AFP, Reuters