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S&P 500, Dow jump over 2% to kick-start fourth quarter

US stock indices rose Monday at the start of the last quarter of a tumultuous year as investors worried about aggressive rate hikes amid historically high inflation and fears of slowing economic growth.


Ten of the 11 major S&P 500 sectors rose in afternoon trading, with the energy sector heading for its best day in more than three months.


oil majors Exxon Mobil (NYSE:) and Chevron Corp (NYSE:) rose more than 4%, following a rise in crude prices as sources said the Organization of the Petroleum Exporting Countries and its allies are considering their biggest production cut since the start of the COVID-19 pandemic. [O/R]


Megacap growth and technology companies like Apple (NASDAQ:) and Microsoft (NASDAQ:) each rose 2%, while banks gained 2.8%.


Data showed manufacturing activity grew at its slowest pace in nearly 2-1/2 years in September as new orders dwindled, likely because rising interest rates to curb inflation cooled demand for goods.


The Institute for Supply Management said the manufacturing PMI fell to 50.9 this month, with no estimates, but still above 50, indicating an expansion in production.


“U.S. equities are rising 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.


“There is speculation in some parts of the markets that the Fed could be ‘turning’, meaning the bank could try to raise interest rates at a slower pace.”


The benchmark continued to support rate-sensitive growth stocks, falling after British Prime Minister Liz Truss was forced to veer towards a top-rate tax cut. [US/]


All three major indices ended a volatile third quarter lower on Friday amid growing fears that the Federal Reserve’s aggressive monetary policy will plunge the economy into recession. [.N]

Tesla (NASDAQ:) Inc was down 8.4% after selling fewer-than-expected vehicles in the third quarter as deliveries lagged far behind production due to logistical hurdles. Peers Lucid Group fell 2% and Rivian Automotive 4%.


Major automakers are expected to report modest declines in new car sales in the US, but analysts and investors are concerned that an obscuring economic picture, not a stock shortage, will lead to a decline in future car sales.


Citigroup (NYSE:) and Credit Suisse became the last brokers to lower their year-end targets for 2022 as US equity markets endure the heat of aggressive central bank action to curb inflation.


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


The number of emerging issues outpaced the pastures 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 one new 52-week highs and 23 new lows, while the Nasdaq recorded 45 new highs and 225 new lows.

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