US stocks bounced back a day after a major selloff in the global markets on worries over China, as the Federal Reserve painted a rosier picture soothing concerns over the possible outcome of China’s economic slowdown.
The Dow Jones Industrial Average added 293.6 points or 1.8% to end at 16,351.58 points, turning positive for the year.
The S&P 500 Index ended 35.01 points or 1.8% higher at 1,948.86 points with all ten of its key sectors ending higher on the day.
The tech heavy Nasdaq Composite added 113.7 points or 2.5% to close at 4,749.48 points .
“What we’re seeing today is not a recovery. It’s market volatility, it’s nervousness, it’s an inability to call the direction of the market,” Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma, told Reuters.
“Through now and October we’re going to see a lot more of this, a lot of volatility.”
The Federal Reserve’s Beige Book stated that several banks were reporting wage pressures brought about by a tightening in the labor market.
This was a change from previous reports which noted higher wages in isolated sectors.
This data, combined with huge declines in commodity prices and the depressing effect of the robust dollar, could provide a good reason for the holding off of the bank’s monetary tightening commencement at the September 16th and 17th policy meeting.
Also aiding the rally were expectations that the European Central Bank would announce new stimulus measures on Thursday.
“We, for a while, have felt that there would be pockets of volatility in markets over the next few years,” Mike Amey, a portfolio manager at Pacific Investment Management Co., which oversees $1.5 trillio, told the Wall Street Journal.
“Our core expectation is that we’re in one of those pockets right now rather than anything more sinister. We are still cautiously optimistic on global growth.”
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