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Wall St rallies as data, RBA move lifts hopes of Fed easing

  • Twitter jumps on News Musk to resume buyout at $54.20/share
  • Rivian wins to confirm FY deliveries outlook; lifts peers
  • The number of jobs in the US had its biggest drop in 2.5 years in August
  • Indexes up: Dow 2.35%, S&P 2.61%, Nasdaq 2.93%

Oct 4 (Reuters) – Wall Street rose for a second straight day on Tuesday after softer U.S. economic data led to lower government interest rates and Australia’s central bank raised interest rates less than expected, raising hopes the Federal Reserve will soon moderate its aggressive rate hikes.

While demand for labor remains fairly strong, U.S. job vacancies fell by the most in nearly 2-1/2 years in August, another sign that the Fed may be easing its mission to tame inflation by tightening the policy. read more

Earlier, the Reserve Bank of Australia surprised the markets with a smaller interest rate increase of 25 basis points than expected. The cash rate rose to a nine-year high after six rate hikes in as many months, following similar moves by other central banks. read more

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The RBA is the first major central bank to recognize that now is the time to slow down after aggressive rate hikes this year, said Anthony Saglimbene, market strategist at Ameriprise Financial in Troy, Michigan.

“The hope is that at some point in the fourth quarter the Federal Reserve will say the same thing. Don’t stop raising interest rates, just slow the pace,” he said. “That’s what the markets kind of rally on below the surface.”

Still, Fed Governor Philip Jefferson said inflation is the most serious problem facing the U.S. central bank and that it “may take some time” to resolve. San Francisco Fed President Mary Daly said the central bank must deliver more rate hikes. read more read more

Price-sensitive technology shares rose as yields on the benchmark 10-year Treasury fell for a second day following jobs data and the RBA’s surprise move. Valuations of technology and other growth stocks are related to the cost of capital.

If the rally holds, the Nasdaq Composite (.IXIC) is set for its best one-day performance since July 27, while the Dow Jones Industrial Average (.DJI) and S&P 500 (.SPX) were poised to score their two biggest -day rallies since April 2020.

Billionaire Elon Musk proposed to go ahead with his initial offer of $54.20 to take Twitter Inc ( TWTR.N ) private, two sources familiar with the matter said on Tuesday, sending the social media company’s shares up 12.67 percent . Tesla shares had risen about 6% before the news and immediately pared gains, up about 2.25% on the day. read more

Megacap titans led the rally, with Inc ( AMZN.O ) climbing 4.36% and Microsoft Corp ( MSFT.O ) rising 2.90%. Apple Inc ( AAPL.O ) rose 1.90% while Google parent Alphabet Inc ( GOOGL.O ) rose 2.62%.

At 2:30 p.m. ET, the Dow Jones Industrial Average (.DJI) rose 667.54 points, or 2.26%, to 30,158.43, the S&P 500 (.SPX) gained 92.64 points, or 2.52%, to 3,771.07 and Composite Nasdaq. IXIC) added 306.59 points, or 2.83%, to 11,122.03.

Banks such as Citigroup, Morgan Stanley and Goldman Sachs climbed nearly 5%, boosting the banking index (.SPXBK) by 4%.

The rally was widespread, with less than a dozen of the S&P 500 trading in negative territory.

The rally in stocks on Monday followed the S&P 500’s (.SPX) close at its lowest in nearly two years last week, capping September’s worst monthly performance since March 2020.

Rivian Automotive Inc ( RIVN.O ) jumped 13.4% after the electric car maker said it produced 7,363 units in the third quarter, up 67% from the previous quarter, and maintained its full-year target of 25,000. Read More

The S&P 500 posted a new 52-week high and a new low; The Nasdaq Composite recorded 45 new highs and 56 new lows.

(This story has been corrected to say the Reserve Bank of Australia raised, not cut, interest rates in the first paragraph.)

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Reporting by Medha Singh, Ankika Biswas and Bansari Mayur Kamdar in Bengaluru; Editing by Anil D’Silva, Arun Koyyur, Sriraj Kalluvila and Richard Chang

Our standards: Thomson Reuters Trust Principles.

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