Wall Street Kicks off Third Quarter with Solid Rebound

On Friday, Wall Street kicked off the first day of the third quarter of the year with a bounce, as it rose sharply in light trading. Investors began the second half of the year on a positive note ahead of a long holiday weekend.

Indexes perform well

All three major stock indexes in the United States managed to reverse their early losses to close the day in positive territory, after having recorded the worst first six months in decades. Nonetheless, the indexes were still on course for posting a weekly loss.

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Market analysts said that there was a late-day relief rise as traders head off into the holiday weekend. However, it remains to be seen if this bounce will be sustainable at the beginning of the new quarter. The focus of market participants will now be on data that is expected in the month.

This includes the June employment report by the Labor Department, the monetary policy meeting of the Federal Reserve in July and the beginning of the earnings season for the second quarter.

Microchip sector falls

There was a sharp drop in the microchip sector after Micron Technology Inc. issued a warning about cooling demand. There was a 2.9% decline in Micron’s shares, which resulted in a 3.8% fall in the Philadelphia SE Semiconductor Index.

The purchasing managers’ index of the Institute for Supply Management (ISM) reflected the concerns about a cooldown in demand because of inflation that has reached decade highs. The index showed that new orders input prices had come down significantly.

The report from ISM provided further evidence that there is a cooldown in the economy and inflation seems to have reached its peak. This has given rise to the possibility that the stance of the US Federal Reserve might turn dovish after they hike the interest rates in July by 75 basis points for the second time.

However, market analysts said that the Fed would require a lot more evidence for changing its mind about continued hikes in the interest rates. Even though there are early signs that inflation has peaked, there is still a great deal of uncertainty about the inflation and economy.

The numbers

There was a rise in 1.05% in the Dow Jones Industrial Average, which climbed by 321.83 points to reach 31,097.26. Meanwhile, a 1.06% gain was recorded in the S&P 500, which rose by 39.95 points to reach 3,825.33. There was also a 0.90% advancement in the Nasdaq Composite, which added 99.11 points to reach 11,127.85.

All of the 11 sectors of the S&P 500 closed the session in positive territory, with the largest percentage gain recorded in utilities. The reporting season for second-quarter earnings is scheduled to begin in a few weeks and pre-announcements have been made by 130 companies on the S&P 500 index. 77 of them have been negative and 45 are positive. This negative/positive ratio is actually weaker than it was a year ago. It is expected that profit margins will be dealt a blow because of waning consumer demand and rising inflation.

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