U.S. stocks rose sharply on Tuesday, with gains accelerating in the final hour of trading after a mostly uneventful session before the Thanksgiving holiday.
The S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite each rose 1.4%, while the Dow Jones Industrial Average (^DJI) gained nearly 400 points, or about 1.2%. The S&P 500 closed above 4,000 for the first time since September, while the Dow posted its highest close in three months.
Cleveland Federal Reserve Bank President Loretta Mester said Tuesday that restoring price stability remains a priority for her and other members of the Federal Open Market Committee (FOMC), which sets monetary policy.
“We have a duty to use our tools to put inflation on a steady downward trajectory to 2%,” he said at an event hosted by his bank.
Mester’s comments come a day after San Francisco Federal Reserve Bank President Mary Daley said Monday that officials could raise the U.S. central bank’s key policy rate above 5% if inflation does not ease. Daly also said it was “premature” to write off a 75-point increase in December and that “nothing is off the table.”
In commodity markets, oil pared Monday’s losses after hitting January lows on fears that new curbs in China and reported output increases by Saudi Arabia and OPEC could weigh on demand. Energy Minister Prince Abdulaziz bin Salman has since played down the prospect of an output increase, helping oil bounce back from a slump. West Texas Intermediate (WTI) crude futures rose to $81 a barrel after hitting $75 a barrel on Monday.
On the corporate side, shares of Zoom Video Communications ( ZM ) fell nearly 4% after the video conferencing platform cut its full-year revenue forecast and predicted further challenges stemming from declining demand for online meetings.
Shares of Abercrombie & Fitch Co. ( ANF ) and American Eagle Outfitters, Inc. ( AEO ) meanwhile rose about 21% and 18%, respectively, after an upbeat earnings report that boosted sentiment around the retail sector’s outlook.
A sharp rise in COVID cases in China has triggered a wave of new restrictions for the world’s largest economy, weeks after investors cheered the end of aggressive lockdowns in the country.
“The specter of COVID still hangs over China’s economy, threatening to create new turmoil for supply chains and commodity demand,” Suzanne Streeter, senior investment and markets analyst at Hargreaves Lansdown, said on Tuesday.
The S&P 500 started the shortened Thanksgiving week lower than in previous years. The index traded slightly lower historically on Thanksgiving Monday, down 0.01%, according to data from Bespoke Investment Group. In years when the index fell by 10% or more year-over-year, as in 2022, performance was more positive, with an average increase of 0.37%.
Alexandra Semenova is a Yahoo Finance reporter. Follow him on Twitter @alexandraandnyc
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