U.S. stocks rose on Wednesday, with the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite inching higher amid major banks’ earnings and fresh bets on further rate cuts by the Federal Reserve.
- Wall Street was upbeat as investors cheered banks earnings and anticipated interest rate cuts.
- Despite U.S.-China trade tensions, stocks were up.
- Bitcoin also held steady above $112,000 amid a slight return to risk-on sentiment.
The Dow Jones Industrial Average added 200 points as the session’s start contrasted with Tuesday’s sharp declines. A similar positive start to midweek trading saw the S&P 500 and the tech-heavy Nasdaq climb 0.7% and 0.9%, respectively.
Why are US stocks up today?
Gains across Wall Street followed a bullish flip in global stocks, largely buoyed by investors’ bets that the Fed will cut interest rates at the next meeting.
Fed Chair Jerome Powell’s dovish tone on Tuesday aided market sentiment, with the U.S. central bank chief noting that the end to the Fed’s shrinking of its balance sheet was close.
Investor anticipation of more easing in coming months is aiding the turnaround.
U.S. stocks are also showing resilience as Wall Street welcomes strong earnings from banks. Most of the top financial institutions have so far posted robust earnings as the season kicks off with a solid start.
Per FactSet data, analysts forecast a 7.9% rise in earnings per share for S&P 500 companies in the third quarter. The estimates mean Wall Street is set to record a ninth straight quarter of higher earnings, although the 7.9% average is slightly lower than the 12% growth for EPS in Q2.
So far, major financial institutions that have reported earnings beats include JPMorgan Chase, Goldman Sachs, Wells Fargo, Citigroup, and Bank of America.
The upbeat outlook for stocks comes as trade tensions between the U.S. and China, and the ongoing government shutdown, present immediate headwinds.
Dollar slips, Bitcoin eyes gains
Powell’s comments saw the U.S. dollar struggle against a basket of peers, with bullish bets on rate cuts the key catalyst. The stock market’s flip in risk sentiment amid trade tensions also impacted the greenback.
The dollar slipping reflected not just in stocks but also crypto. Bitcoin (BTC) held onto gains with price hovering above $112,000 as crypto investors sought a market reset.