S&P 500 and Dow jump more than 2% to kick off fourth quarter

  • Tesla down as third-quarter deliveries miss market estimates
  • US factory activity slowest in ~2.5 years in September -ISM
  • Credit Suisse and Citi cut their 2022 year-end target for the S&P 500
  • Indices up: Dow 2.22%, S&P 2.02%, Nasdaq 1.54%

Oct 3 (Reuters) – U.S. stock indexes rose on Monday at the start of the final quarter of a tumultuous year in which investors worried about aggressive interest rate hikes amid historically high inflation and fears of slowing economic growth.

Ten of the 11 major sectors of the S&P 500 rose at midday, with the energy sector (.SPNY) heading for its best day in more than three months.

Oil majors Exxon Mobil (XOM.N) and Chevron Corp rose more than 4%, following a rise in crude prices as sources said the Organization of the Petroleum Exporting Countries and its allies were eyeing their strongest reduction in production since the start of the COVID-19 pandemic.

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Megacap growth and technology companies such as Apple (AAPL.O) and Microsoft (MSFT.O) gained 2% each, while banks (.SPXBK) gained 2.8%.

Data showed manufacturing activity grew at its slowest pace in nearly 2½ years in September as new orders contracted, likely as interest rates hiked to rein in inflation. dampened demand for goods. Read more

The Institute for Supply Management said its manufacturing PMI fell to 50.9 this month, missing estimates but still above 50 indicating an expansion in manufacturing.

“U.S. stocks are up on weaker-than-expected manufacturing data as traders believe bad news for the economy is good news for the stock market,” said David Madden, market analyst at Equiti Capital. .

“In some pockets of the markets, there is speculation that the Fed may ‘pivot’, meaning the bank may seek to raise interest rates at a slower pace.”

Further supporting rate-sensitive growth stocks, the benchmark 10-year US Treasury yield fell after British Prime Minister Liz Truss was forced to reverse a tax cut for the top rate.

All three major indexes ended a volatile third quarter lower on Friday on growing fears that the Federal Reserve’s aggressive monetary policy could tip the economy into recession.

Tesla Inc (TSLA.O) fell 8.4% after selling fewer vehicles than expected in the third quarter as deliveries lagged far behind production due to logistical hurdles. Peers Lucid Group (LCID.O) slipped 2% and Rivian Automotive (RIVN.O) 4%. Read more

Major automakers are expected to report modest declines in U.S. new-vehicle sales, but analysts and investors fear a darkening economic picture, not inventory shortages, could lead to lower future sales of cars. Read more

Citigroup and Credit Suisse have become the latest brokerages to lower their 2022 year-end targets for the S&P 500 as U.S. stock markets feel the heat from aggressive central bank actions to rein in inflation. Read more

Credit Suisse also set a 2023 year-end price target for the benchmark at 4,050 points, adding that 2023 would be a “year of low, non-recessionary growth and falling inflation.”

Advancing issues outnumbered declining issues with a 5.48-to-1 ratio on the NYSE and a 2.24-to-1 ratio on the Nasdaq.

The S&P index recorded a new 52-week high and 23 new lows, while the Nasdaq recorded 45 new highs and 225 new lows.

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Reporting by Ankika Biswas and Bansari Mayur Kamdar in Bengaluru; Editing by Anil D’Silva and Arun Koyyur

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