Stocks closed higher Wednesday as bargain hunters swooped in following a lengthy stretch of losses for the major indexes.
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Today's positive price action came as the 10-year Treasury yield eased back from yesterday's two-month high, finishing down 6.7 basis points at 3.273%. A basis point is one-one hundredth of a percentage point.
And the buying persisted even after Federal Reserve Vice Chair Lael Brainard said in an early afternoon speech that the central bank is "in this for as long as it takes to get inflation down." The Fed will meet later this month, with the market largely pricing in the probability of a third straight 75 basis-point rate hike.
Nearly all sectors finished higher, with utilities (+3.1%) and consumer discretionary stocks (+3.1%) leading the charge. The one outlier was energy, which slumped 1.2% as U.S. crude futures tumbled 5.7% to $81.94 per barrel - their lowest close since Jan. 11, according to Dow Jones Market Data - amid expectations of slowing global economic growth. "Oil's breakdown today is a bigger shot across the bow, pointing to further struggles ahead in our opinion," says Dan Wantrobski, technical strategist and associate director of research at Janney Montgomery Scott. "We believe the commodity can break below $80 from here, targeting the mid-$70s range in the weeks ahead."
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As for the major indexes, the Nasdaq Composite jumped 2.1% to 11,791 - snapping its seven-day losing streak, its longest one since 2016. The S&P 500 Index (+1.8% at 3,979) and the Dow Jones Industrial Average (+1.4% at 31,581) also notched impressive gains.
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Other news in the stock market today:
Uncertainty over the magnitude of the Federal Reserve's next rate hike will continue to move markets until the central bank's next policy meeting, scheduled for Sept. 20-21. That makes tomorrow morning's speech from Fed Chair Jerome Powell a key event to watch, and one that could potentially spark more volatility for stocks.
But sage investors know these short-term ups and downs are merely noise when compared to the bigger picture. "In the end, the day-to-day machinations of the market only matter to the extent we allow them to," says Ross Mayfield, investment strategy analyst at Baird. "Volatility and sell-offs - in all of their various shapes and sizes - are just a reality to bear for the long-term stock owner."
Indeed, investors can take advantage of the down days to gradually boost their core portfolio holdings. Not sure where to start? How about with these sturdy blue-chip stocks or by checking out some of Wall Street's best dividend payers. For investors wanting a broader approach, may we suggest the Kip 25. This list of Kiplinger's favorite low-cost mutual funds boast solid long-term performance records and managers with tenures to match. Check them out.