Home / Markets / Wall Street opens sharply higher, market clawing back more ground

As the market continued to claw back the ground it lost in several weeks, the stocks on Wall Street opened at a higher rate. In the early going on Tuesday, the benchmark index was up slightly more than 2%. Other major US indexes rose as well. Treasury yields have continued to fall from multiyear highs. European markets rose sharply as well while the Australian stock market rose 3.8% overnight after the country's central bank raised interest rates by a smaller amount compared to previous hikes.

On Tuesday, US futures are sharply higher, potentially extending a quarter-opening rally this week following a dismal September.

Dow Jones industrials futures rose 1.3%, while S&P futures rose 1.6%. The tech-heavy Nasdaq composite, which has been battered, leads the way with a 2% gain.

Global stock markets are rebounding with European stocks gaining in Asia and the US. The recovery is raising hopes about US Fed going easy on its aggressive interest rates hike.

On Monday, a report on manufacturing in the US gave weaker than expected results as it outlined a drop in construction spending in July and August. The aggressive rate hikes by the US Fed are not going well with investors, affecting businesses as well as families, during times of high inflation.

The rise in interest rates is making it expensive to borrow money to buy a house, car, etc. The Fed is raising interest rates with the goal of slowing the economy just enough to starve inflation of the spending that has driven up prices.

The Fed has already raised its key overnight interest rate from near zero in March to a range of 3% to 3.25%. Most market participants anticipate that it will be more than a full percentage point higher by early next year.

However, as central banks around the world raise interest rates in lockstep, financial markets are fraying and corporate profits are falling.

The S&P/ASX 200 in Australia rose 3.8% to 6,699.30 after the country's central bank raised its benchmark interest rate for the sixth consecutive month to 2.6%, which is the highest in 9 years. Australian Reserve Bank's quarter-point increase in the interest rate was smaller than those seen in recent monthly meetings.

It was the first rate hike in more than 11 years when the bank raised the rate by a quarter percentage point at its board meeting in May. The rates have now reached its highest level since August 2013, when the bank reduced the interest rate from 2.75% to 2.5%.

Lower interest rates boost the prices of everything from cryptocurrencies to gold and when bonds pay less in income, these can suddenly look more appealing.

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