Stocks rise as Wall Street bounces back from three-week loss

U.S. stocks edged higher on Wednesday as Wall Street tried to shake off a three-week-long selloff in stock markets.

The S&P 500 rose 0.9% and the Nasdaq Composite each gained 0.9%, while the Dow Jones Industrial Average jumped 240 points, or about 0.8%.

In commodities, oil prices fell after a report that Russian President Vladimir Putin threatened to cut off energy supplies if price caps are imposed by the West on Russia’s oil and gas exports. West Texas Intermediate crude fell nearly 4% to $2.93 a barrel, its lowest level since January. 24. Brent futures fell 3.5% to $89.59 a barrel.

And on the currency front, the dollar index hit a two-decade high of 110.55 on Tuesday.

Wednesday’s moves in markets follow a recent report by Nick Timiraos in the Wall Street Journal that suggested another 75 basis point interest rate hike by the Federal Reserve is likely later this month.

“Powell’s public pledge to lower inflation, even if it raises unemployment, appears to have put the central bank on a path to raise interest rates by 0.75 percentage points instead of 0.50 points this month,” Timiraos wrote.

“A tough 2022 for stocks may not get much easier as we now await better news on the inflation front, facing a seasonally weak September,” strategists at LPL Financial Research.

Since 1950, the S&P 500 has recorded an average decline of 0.54% in September, the worst historical performance of any 12 months of the year. Additionally, September was the only decade in the past when the benchmark index posted an average loss.

In the cryptocurrency markets, Bitcoin (BTC-USD) fell below $19,000, testing a new low for the year.

Shares of Sharpie marker-, Elmer’s glue-, and Yankee Candle-maker Newell Brands ( NWL ) fell nearly 5% after the company cut its full-year forecast after the closing bell on Tuesday. Chief Executive Ravi Saligram said Newell experienced a “significantly larger than expected pullback” in retail orders as inflation pressures consumer spending.

Sharpie markers owned by Newell Brands are seen for sale at a store in Manhattan, New York City, U.S., February 7, 2022. REUTERS/Andrew Kelly

Sharpie markers owned by Newell Brands are seen for sale at a store in Manhattan, New York City, U.S., February 7, 2022. REUTERS/Andrew Kelly

GameStop ( GME ) was in the spotlight Wednesday, with the meme-stock favorite set to report second-quarter earnings after the market close. Shares fell about 6% on Wednesday.

Throughout July and August, analysts cut their earnings-per-share estimates for the third quarter by a wider-than-average margin, according to FactSet Research. The bottom-up EPS estimate for the third quarter — an aggregation of the average third-quarter EPS estimates for all companies in the S&P 500 — fell 5.4% from June 30 to August 31.

Typically, analysts cut earnings estimates during the first two months of a quarter. Over the past two decades, the average EPS estimate decline from bottom to top during the first two months of the quarter has been 2.9%.

Morgan Stanley’s Michael J. Wilson, one of Wall Street’s most bearish strategists, lowered his expectations for earnings per share growth for the year in a note on Tuesday, citing the growing threat posed by a slowing economy — more more than inflation or monetary tightening by the Federal Reserve. Wilson expects earnings to fall 3%, even if the U.S. economy doesn’t go into recession.

Alexandra Semenova is a reporter for Yahoo Finance. Follow him on Twitter @alexandraandnyc

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