Wall Street ends up 2% after sharp reversal; technicals help

With this morning’s CPI data coming in with bad news, all three indexes fell right out of the gate. But then investors must have given the issue a second thought because they evidently quickly concluded that the CPI numbers were already priced in and therefore it was a prime opportunity for snatching up bargains. After all, the CPI report, though not great at 8.2%, was after all just 0.1% above the forecast of 8.1% so, as today’s expert put it, “all we really need is things to be not as bad as suspected.”  

Q3 kicks off Friday with the banks and that’s when we’ll find out what the markets really want to know – is inflation (and rate hikes) negatively impacting earnings?  Volume was quite high and considerably above average at 13.4 billion.  But the bar is already set so low that the best bet right now is that most companies, as they usually do, will be beating expectations.  And then the market will go up again. 

Thu  October 13, 2022  6:49 PM

Wall Street ends up 2% after sharp reversal; technicals help

By Caroline Valetkevitch

DJ: 29,210.85  -28.34         NAS: 10,417.10  -9.09         S&P: 3,577.03  -11.81      10/12

DJ: 30,038.72  +827.87      NAS: 10,649.15  +232.05    S&P: 3,669.91  +92.88     10/13

NEW YORK, Oct 13 (Reuters) - U.S. stocks surged to close more than 2% higher on Thursday, as technical support and investors covering short bets drove a dramatic rebound from a selloff earlier in the day.  The reversal marked a jump of nearly 194 points in the S&P 500 from its low of the session to its high, the biggest intraday jump for the index since Jan. 24.  Financials (.SPSY) and energy (.SPNY) led gains among S&P 500 sectors.  The market initially dropped after data showed the headline consumer price index rose at an annual pace of 8.2% in September, compared with an estimated 8.1% rise. read more

"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 827.87 points, or 2.83%, to 30,038.72, the S&P 500 (.SPX) gained 92.88 points, or 2.60%, to 3,669.91 and the Nasdaq Composite (.IXIC) added 232.05 points, or 2.23%, to 10,649.15.

"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 2.24-to-1 ratio; on Nasdaq, a 2.10-to-1 ratio favored advancers.  The S&P 500 posted three new 52-week highs and 172 new lows; the Nasdaq Composite recorded 51 new highs and 600 new lows.

Volume on U.S. exchanges was 13.39 billion shares, compared with a roughly 11 billion average for the full session over the last 20 trading days.