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Wall Street ends the first day of the third quarter with a solid rebound

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 30, 2022. REUTERS/Brendan McDermid/Files

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  • US factory activity slows more than expected in June
  • Micron’s pessimistic forecast prompts chip sales
  • Kohl’s collapses after canceling sale to Franchise Group
  • Indices up: Dow 1.05%, S&P 1.06%, Nasdaq 0.90%

NEW YORK, July 1 (Reuters) – Wall Street rebounded from a sharply higher close in light trading on Friday as investors kicked off the second half of the year ahead of the holiday long weekend.

All three major U.S. stock indices reversed their first losses to find themselves well into positive territory in the wake of the stock market’s worst first half in decades.

Still, all three indices posted losses for the week.

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“We’re heading into the holiday weekend and having an end-of-day relief rally,” said Joseph Sroka, chief investment officer at NovaPoint in Atlanta. “But we’ll probably have to wait for investors to come back from the holiday weekend to see if that’s sustainable at the start of the new quarter.”

Market participants are now looking ahead to the second-quarter earnings season, the Labor Department’s June jobs report and the Federal Reserve’s monetary policy meeting expected later in July.

The microchip sector fell sharply after Micron Technology Inc (MU.O) warned of cooling demand. Read more

Micron shares fell 2.9%, dragging the Philadelphia SE Semiconductor Index (.SOX) down 3.8%.

Concerns over falling demand in the face of decades-high inflation were reflected in the Institute for Supply Management’s (ISM) Purchasing Managers’ Index, which showed a deceleration in input prices for new orders.

The ISM report appears to support the view that the economy is cooling and inflation appears to have passed its peak. This raised the possibility that the Fed may have room for a dovish pivot after its second consecutive 75 basis point interest rate hike expected in July.

“The Fed is going to need a lot more evidence to change its mind about further continued interest rate hikes,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. “There is still a lot of uncertainty about the economy and inflation despite early signs that inflation may have peaked.”

The Dow Jones Industrial Average (.DJI) rose 321.83 points, or 1.05%, to 31,097.26, the S&P 500 (.SPX) gained 39.95 points, or 1.06%, to 3,825.33 and the Nasdaq Composite (.IXIC) added 99.11 points, or 0.90%, to 11,127.85.

The 11 major sectors of the S&P 500 ended the session in green, with utilities (.SPLRCU) enjoying the largest percentage gain.

The second quarter reporting season begins in several weeks and 130 of the S&P 500 companies have announced in advance. Of those, 45 were positive and 77 were negative, a lower negative-to-positive ratio than a year ago, according to Refinitiv data.

The prospect of profit margins hit by killer inflation and lower consumer demand will cause market participants to listen closely to forecasts.

Analysts now expect overall second-quarter S&P 500 earnings growth of 5.6%, down from the 6.8% expected at the start of the quarter, according to Refinitiv.

Shares of department store chain Kohl’s Corp (KSS.N) fell 19.6% following its decision to halt talks of a possible sale to Franchise Group (FRG.O). Read more

Advancing issues outnumbered declining ones on the NYSE by a ratio of 2.77 to 1; on the Nasdaq, a ratio of 1.57 to 1 favored advancers.

The S&P 500 posted a new 52-week high and 48 new lows; the Nasdaq Composite recorded 12 new highs and 219 new lows.

Volume on US exchanges was 11.01 billion shares, compared to an average of 12.88 billion over the past 20 trading days.

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Reporting by Stephen Culp; Additional reporting by Amruta Khandekar and Sruthi Shankar in Bengaluru; Editing by David Gregorio

Our standards: The Thomson Reuters Trust Principles.

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