U.S. stocks rallied Wednesday, as traders cheered better-than-expected economic data that slowed down the idea that a recession is inevitable.
The Dow Jones Industrial Average rose 245.66 points, or 0.76%. The S&P 500 gained 1.02%, and the Nasdaq Composite increased 1.75%, boosted by rising tech stocks.
Comments from St. Louis Federal Reserve President James Bullard also boosted sentiment. He told CNBC Wednesday morning that he doesn’t think the U.S. is currently in a recession, and that rate hikes to tame high inflation will continue.
“We’re going to have to see convincing evidence across the board, headline and other measures of core inflation, all coming down convincingly before we’ll be able to feel like we’re doing our job,” Bullard said during a live “Squawk Box” interview.
Bullard’s comments echo remarks made by other Fed officials. San Francisco Fed President Mary Daly said Tuesday the central bank’s work to tame inflation is “far from done.”
“When we get a nice surprise like this it readjusts your thinking, so that’s why I think the market is taking off,” said Kim Forrest, founder at Bokeh Capital Partners, adding that every day investors are weighing if the U.S. is in a recession. “This is just more information telling us that maybe things just aren’t as bad as we forecast.”
Traders shook off anxiety that House Speaker Nancy Pelosi’s visit to Taiwan could further strain already tense U.S.-China relations. China had spent weeks warning her not to make the trip. Markets fell further after three Federal Reserve presidents hinted that further rate hikes would be necessary to combat high inflation.
Traders are also anticipating another batch of second-quarter earnings. Lucid Group and Spirit AeroSystems report after the bell.
In economic data, investors this week will be watching the July nonfarm payrolls report, due Friday.