Wall Street shrugs off recession, Brexit fears

A trader works on the floor of the New York Stock Exchange, Aug 23, 2019.
A trader works on the floor of the New York Stock Exchange, Aug 23, 2019.PHOTO: EPA-EFE

NEW YORK (AFP) - US stocks rebounded on Wednesday (Aug 28), rallying as bargain-hunting investors snatched up equities that opened in the red.

Energy stocks also benefitted from a plunge in crude oil inventories, pointing to sustained demand for fuel.

But light trading volume in the final week of August heightened volatility in share prices, traders said.

Falling bond yields and ebbing confidence in a likely resolution to the fraught US-China trade conflict have weighed on stocks since last week, and further Brexit turmoil on Wednesday spooked Wall Street early in the session.

By the close, the benchmark Dow Jones Industrial Average had swung 400 points from the day's low, finishing up 1 per cent at 26,035.21.

The broader S&P 500 added 0.7 per cent to close at 2,887.97, and the tech-heavy Nasdaq gained 0.4 per cent, settling at 7,856.88.

Quincy Krosby of Prudential Financial said traders were rebalancing their portfolios ahead of the end of the month amid light, late-summer volume.

"When volumes pull back, the market can go in either direction," she told AFP.

Adam Sarhan of 50 Park Investment also said buyers had been attracted by cheap stock prices during the morning sell-off.

"Every time the market fell off the last month, we've seen the buyers show up and curb the selling," he said.

Earlier Wednesday, yields on 30-year Treasury bonds touched a fresh all-time low while the spread between 2- and 10-year Treasury notes widened the most since 2007, indicating waning confidence in the longer-term outlook and drawing more attention to this closely-watched recession indicator.

Meanwhile, British Prime Minister Boris Johnson announced the annual suspension of parliament would be extended until two weeks before a Brexit deadline - exacerbating fears of a chaotic and potentially damaging exit from the EU, which is due Oct 31.

Among individual companies, the surprise dip in oil inventories lifted super-majors Chevron and Exxon Mobil 0.9 per cent and 0.7 per cent, respectively.

Tiffany & Co, the jeweler famed for its robin's egg blue boxes, jumped 2.9 per cent after posting better-than-expected quarterly earnings.

But drug maker Johnson & Johnson fell 0.7 per cent after Moody's cut its outlook for the company's debt, citing its continuing exposure to litigation from the opioid crisis.