Wall Street’s main indexes have risen in early trading, supported by banks and megacap growth stocks, while focus is squarely on the Federal Reserve’s annual Jackson Hole symposium for clues on the central bank’s monetary policy outlook.
Wall Street snapped its three-day losing streak on Wednesday, boosted by strong gains in energy stocks but closed the session off intraday highs as markets remained cautious on how the Fed plans to curb inflation amid rising concerns around slowing global growth.
“People are coming back to the market gradually with the assumption that a lot of the bad news has already been priced in,” said Brian Vendig, president of MJP Wealth Advisors.
Chair Jerome Powell’s speech due on Friday will be scrutinised for any indication that an economic slowdown might alter the Fed’s strategy and if the central bank can achieve a “soft landing” for the economy.
“Investors are going to be really keen to hear whether or not the Fed is going to be blind to increasing interest rates and fighting inflation at the cost of economic growth,” Vendig added.
Data earlier in the day showed the US economy contracted at a moderate pace than initially thought in the second quarter as consumer spending blunted some of the drag from a slower pace of inventory accumulation, dispelling fears that a recession was underway.
Traders are seeing a slightly greater likelihood of a third 75 basis-point hike from the Fed at its policy meeting next month, compared to a smaller 50 basis-point rate hike.
Kansas City Fed President Esther George said it was too soon to predict how much the US central bank would raise interest rates next month, with key reports on inflation and the labour market still to come.
Investors will also be looking for details on the Fed’s plans to reduce its nearly $US9 trillion ($A13 trillion) balance sheet, a process that started in June.
Most high-growth and technology stocks rose in early trading, with Apple Inc and Alphabet Inc adding more than 1.0 per cent each.
Electric vehicle maker Tesla Inc slipped 0.3 per cent after its 3-for-1 stock split came into effect.
Nine of the 11 major S&P 500 sectors advanced on Thursday, with material stocks leading gains.
Energy stocks rose for a third straight session as crude prices extended their rally on mounting supply tightness concerns.
In early trading, the Dow Jones Industrial Average was up 54.40 points, or 0.16 per cent, at 33,023.63, the S&P 500 was up 22.31 points, or 0.54 per cent, at 4,163.08, and the Nasdaq Composite was up 78.72 points, or 0.63 per cent, at 12,510.24.
Big banks advanced 1.0 per cent in early trading, with Citigroup and Morgan Stanley leading gains.
Weighing on the blue-chip Dow, Salesforce Inc slid 7.4 per cent as it cut its annual revenue and profit forecasts over “measured” spending from clients and a hit from a stronger dollar.
Helped by better than feared results from US corporations, the S&P 500 has recovered about 13 per cent from its bear market lows in mid-June.
The benchmark index is set to end the year a little above its current level, according to strategists recently polled by Reuters.
Graphics chip designer Nvidia Corp slipped 0.8 per cent after it forecast a sharp drop in revenue for the current quarter on the back of a weaker gaming industry.
Semiconductor stocks, however, rose 1.5 per cent.
The White House said US President Joe Biden will sign an executive order on implementation of the $US52.7 billion semiconductor chips manufacturing subsidy and research law.
Advancing issues outnumbered decliners by a 3.08-to-1 ratio on the NYSE and a 2.06-to-1 ratio on the Nasdaq.
The S&P index recorded two new 52-week highs and 29 new lows while the Nasdaq recorded 29 new highs and 29 new lows.