2 min read.Updated: 23 Sep 2021, 08:30 PM ISTReuters
Financial stocks were the best performers in early trade, jumping 1.7% on expectations of higher lending rates
Accenture added nearly 2% after the IT consulting firm raised its first-quarter outlook
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The S&P 500 and the Dow indexes were set for their best day in two months on Thursday as investors brushed off concerns over the Federal Reserve's tapering plans, while forecast raises from Accenture and Salesforce added to the positive mood.
The Fed said on Wednesday it could begin reducing its monthly bond purchases by as soon as November, and that interest rates could rise quicker than expected by next year. The November deadline was largely priced in by markets.
The central bank also projected inflation at 4.2% by the year-end, more than twice its target rate of 2.0%. Still, the Fed remained optimistic over a return to economic normalcy by next year.
Financial stocks were among the best performers, jumping 2.5% on expectations of higher lending rates.
Commodity-linked sectors rose on hopes of a pickup in demand, while defensives such as real estate stocks were the sole decliners.
IT services provider Salseforce.com Inc jumped 5.7% and was among the top boost to the S&P and the Dow after it raised its annual earnings forecast.
Accenture added 1.5% after the IT consulting firm boosted its first-quarter outlook.
Easing concerns over a potential default by Chinese property developer Evergrande also fed into market optimism. But Reuters reported that some holders of the firm's dollar bonds had given up hope of getting a coupon payment by a key Thursday deadline.
Investors shrugged off data showing sluggish business activity growth and a rise in jobless claims, in line with expectations for a slowdown in economic growth in the third quarter.
"The Fed's stance is still accommodative and it's reasonable for the Fed to want to return to a state of normalcy if the economy is as robust as (recent) data suggests," said Mike Loewengart, managing director, investment strategy at E*TRADE Financial.
Data last week showed a surprise jump in retail sales, suggesting that consumer spending, a key gauge of economic growth, remained strong despite the impact of the Delta variant of the coronavirus.
"Given the recent volatility, it's likely that investors are viewing the taper projection and potential 2022 rate hikes as a vote of confidence that the recovery is on track," Loewengart said.
At 11:47 a.m. ET, the Dow Jones Industrial Average rose 528.65 points, or 1.54% , to 34,786.97, the S&P 500 gained 54.57 points, or 1.24 %, to 4,450.21 and the Nasdaq Composite gained 127.12 points, or 0.85 %, to 15,023.97.
The S&P 500 broke above its 50-day moving average, after trading below the indicator for three sessions - its biggest such breach since early-March.
Wall Street indexes are still trading lower for the month, owing to seasonally weak trends, as well as concerns over fiscal spending and a slowdown in economic growth.
Advancing issues outnumbered decliners by a 2.3-to-1 ratio on the NYSE and on the Nasdaq.
The S&P 500 posted 22 new 52-week highs and three new lows, while the Nasdaq recorded 100 new highs and 44 new lows.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
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