NEW YORK, Oct 4 — Wall Street stocks surged ahead early today, with the Dow gaining more than 700 points after a cautious move by the Australian central bank spurred hopes for a similar policy pivot by the Federal Reserve.
The Reserve Bank of Australia (RBA) raised its policy interest rate less than expected, a 0.25 percentage point hike which was half of what had been forecast, and said that while more increases will be needed to tame inflation it wanted to pause to assess the impact rapid moves implemented this year.
The decision came a day after the UN called on central banks to ease off, saying aggressive rate hikes risked pushing the world into grim prolonged stagnation.
Central banks face a difficult task as they work to bring down damaging inflation without causing a severe recession, a battle many commentators warn they are losing.
The Fed and European Central Bank have flagged further hikes are coming, but markets have grasped at signs inflation and supply pressures have eased to anchor hopes that US central bankers will pull back, despite official comments to the contrary.
Though Friday’s key US employment report looms large, Briefing.com analyst Patrick J O’Hare said, “For now, though, the stock market is acting as if it wants to believe that the Fed will soon take a softer angle with its rate-hike approach.”
Investors also have taken advantage of the dismal September to snap up bargains.
The Dow Jones Industrial Average jumped 2.5 per cent to 30,228.56 less than an hour into the trading session.
The broad-based S&P 500 gained 2.7 per cent to 3,777.76, while the tech-rich Nasdaq Composite Index rose 3.2. per cent to 11,158.91.
Among individual stocks, Micron Technology jumped about four per cent after announcing a US$100 billion investment in a semiconductor plant in New York — which drew applause from US President Joe Biden who called the move “another win for America.” — AFP
