U.S. stocks charged forward Wednesday as Wall Street clawed back from a three-week long sell-off across equity markets.
The S&P 500 rallied 1.8%, while the Dow Jones Industrial Average added 436 points, or about 1.4%. The Nasdaq Composite led gains, surging 2.1% to notch its biggest jump in four weeks and snap a seven-day streak of declines.
In commodity markets, oil slid to a fresh seven-month low. West Texas Intermediate crude oil tumbled 5.7% to settle at $82.32 per barrel, the lowest level since Jan. 13. Brent futures dropped 5.4% to settle at $87.62 per barrel. Declines came on the heels of a report Russian President Vladimir Putin threatened to cut off energy supply if price limits are imposed by the West on Russia’s oil and gas exports.
Apple (AAPL) debuted its iPhone 14 and iPhone 14 Pro Wednesday afternoon at its annual product launch in Cupertino, California along with a lineup of other products. Shares closed up 0.9% after hitting a session high of as much as 1.1% during the event.
The Federal Reserve’s “Beige Book,” which offers a periodic gauge of the U.S. economy, suggested growth is expected to slow while inflation cools.
Separately at a speech in New York, Federal Reserve Vice Chair Lael Brainard said Wednesday that U.S. central bank will need to raise interest rates further and for as long as it takes to restore price stability, even as signs emerge that inflation is slowing.
“While the moderation in monthly inflation is welcome, it will be necessary to see several months of low monthly inflation readings to be confident that inflation is moving back down to 2 percent,” Brainard said in remarks.
Earlier in the session, a report from the Wall Street Journal suggested the Fed is likely to deliver another 75 basis-point interest rate hike at its policy meeting later this month.
“Powell’s public pledge to reduce inflation, even if it increases unemployment, appears to have put the central bank on a path to raise interest rates by 0.75 percentage point rather than 0.50 point this month,” Timiraos wrote.
On the currencies front, the U.S. dollar index soared to $110.24 after touching a 20-year high earlier in the day.
In the crypto world, Bitcoin (BTC-USD) tumbled below $19,000, testing a new low for the year.
Elsewhere in markets, airline stocks rallied Wednesday after United Airlines Holdings, Inc. (UAL) raised its sales outlook for the third quarter, with UAL itself climbing 5.5%.
Shares of Sharpie marker-, Elmer’s glue-, and Yankee Candle-maker Newell Brands (NWL) closed higher after paring a 5% slide. The company was in focus during the session after slashing its full-year forecast late Tuesday. Chief Executive Officer Ravi Saligram said Newell experienced a “significantly greater-than-expected pullback” in retail orders as inflation pressures consumer spending.
Investors awaited second-quarter earnings from GameStop (GME) after market close. Shares were down around 4%.
Across the months of July and August, analysts trimmed their third-quarter earnings per share estimates by a larger margin than average, according to FactSet Research. The Q3 bottom-up EPS estimate – an aggregation of the median EPS estimates for Q3 for all the companies in the S&P 500 – decreased by 5.4% from June 30 to August 31.
Typically, analysts reduce earnings estimates during the first two months of a quarter. Over the past two decades, the average decline in the bottom-up EPS estimate during the first two months of a quarter has been 2.9%.
Morgan Stanley’s Michael J. Wilson, one of Wall Street’s most bearish strategists, cut his expectations for earnings-per-share growth for the year in a note Tuesday, citing the growing threat posted by a slowing economy – more than inflation or monetary tightening by the Federal Reserve. Wilson expects earnings to fall 3%, even if the U.S. economy does not enter a recession.
Since 1950, the S&P 500 has registered an average decline of 0.54% in September, the worst historical performance of all 12 months of the year, according to data from LPL Financial. Moreover, September has been the only month over the past decade when the benchmark index averaged a loss.
“The difficult 2022 for stocks may not get much easier because as we now wait for better news on the inflation front, we have to contend with a seasonally weak month of September,” LPL strategists said in a recent note.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc