- Wall Street's main stock benchmarks closed higher Thursday after two days of declines.
- St. Louis Fed President James Bullard said the central bank is "behind the curve" on fighting inflation.
- Stocks appeared to take in stride Bullard's view that the Fed needs to raise rates by 3 percentage points this year.
US stocks reversed higher Thursday, with investors halting a selloff that ran for two consecutive sessions and embracing risk even as a Federal Reserve official said the central bank needs to be aggressive in raising interest rates.
The Nasdaq Composite recovered a portion of the 2% slump it suffered on Wednesday, and the S&P 500 and the Dow Jones Industrial Average joined the tech-concentrated index in rising for the first time in three sessions.
Stocks overcame earlier losses and appeared to absorb remarks by St. Louis Fed President James Bullard who reportedly said on Thursday the Fed is "behind the curve" in curbing inflation. He said the central bank will need to raise interest rates another 3 percentage points by the end of 2022, according to Reuters. The Fed in March raised its fed funds rate by 25 basis points from near zero.
A key portion of the yield curve also steepened Thursday. The 10-year yield rose 5 basis points to 2.65%, while the 2-year yield dipped 2 basis points to 2.45%. The spread between the 10-year yield and the 2-year yield had briefly inverted in recent days to send a recession warning.
Here's where US indexes stood at 4:00 p.m. on Thursday:
- S&P 500: 4,500.21, up 0.43%
- Dow Jones Industrial Average: 34,583.57, up 0.25% (87.06 points)
- Nasdaq Composite: 13,897.30, up 0.06%
Stocks dropped Wednesday after minutes from the Federal Reserve's most recent meeting showed policymakers agreed on the need to move "expeditiously" in raising interest rates to restore price stability, with inflation sitting at 7.9%. It also indicated it will start reducing its balance sheet in May by $95 billion each month.
"The Fed has stated in the past that it's committed to flexibility, but it's hard to see the Fed taking a stronger stance on rate hikes than what the market is already expecting. And that disparity between the market's expectations and the Fed's actual moves may open the door for more relief rallies down the road," said Callie Cox, US investment analyst at eToro, in a note late Wednesday.
"Economic and earnings data, while under pressure, looks decent, and the Fed is still aware of lingering risks to future growth," she said.
Rite Aid shares sank after Deutsche Bank slashed its price target to $1 as COVID-19 'hastens the decline' of the company's retail pharmacy business.
Wedbush is recommending investors make big moves into tech as the sector is now oversold on fears of interest rate hikes. The firm's top picks include Apple, Microsoft, and cybersecurity names like ZScaler and Palo Alto Networks.
In commodities, JPMorgan says the sector broadly has room for as much as 40% more upside given investors are under-allocated in the space.
Oil prices were steady. West Texas Intermediate crude shed 1 cent at $96.22 per barrel. Brent crude, the international benchmark, slipped a penny to $100.57 per barrel.
Gold rose 0.7% to $1,935.70 per ounce. Bitcoin rose 1.3% to $43,723.63.