Wall Street: Dow Jones, S&P 500, NASDAQ rise on Wednesday

Three major indexes on Wall Street ended Wednesday higher, posting the most significant daily gains so far this month.

The Dow Jones closed at 33,376.48, gaining 526.74 points or 1.6 percent. The S&P 500 — which tracks the stock performance of the 500 largest companies in the U.S. — concluded the session at 3,878.44, raising by 56.82 points or 1.49 percent. The tech-leaning NASDAQ ended the day at 10,709.37, increasing by 162.26 points or 1.54 percent.

Within the S&P index, the energy sector showed the most significant gains at 1.89 percent, thanks to the rising oil futures. Meanwhile, the consumer sector was the least notable contributor to the index, with a 0.8 percent gain.

Several companies contributed to the gains. Cruise operator Carnival Corp reported a 4.7 percent jump in its shares after reporting a lower-than-projected quarterly loss. AMC Entertainment Holdings posted a 4.3 percent increase after suspending talks regarding the acquisition of the defunct Cineworld Group.

The shares of Nike Inc jumped by 12 percent after the company exceeded its profit projection due to strong demand during the holiday season in North America.

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FedEx Corp reported a 3.4 percent growth in its stock after reporting higher earnings per share than the earlier estimate. The transportation service company recently announced plans to further reduce its operating costs by $1 billion.

Analysts said consumer confidence in the market rose in December amid the slowing pace of inflation and the resilient job market. Edward Jones investment strategist Angelo Kourkafas especially emphasized the growth in Nike and FedEx’s shares.

"We're seeing a broad rally. It's been helped by upbeat corporate commentary and an improvement in consumer confidence," Kourkafas said.

Despite higher consumer confidence in the economy, data reported a 7.7 percent decline in existing home sales last November due to higher mortgage rates — an effect of the Federal Reserve’s tight monetary policy. Investors, however, expected the slump in the housing market could motivate the Fed to loosen its policy soon.

Commonwealth Financial Network chief of investment management Brian Price revealed his positive outlook on the U.S. economy. Price said many companies still showed resilience despite the economic weakness at the macro level. He was adamant that this situation would yield positive results.

The anticipation of a recession due to the Fed’s continuous interest rate hikes beginning this March has caused a fluctuation in the equity market. This year, the S&P index is also on track for its largest annual decline since the financial crisis in 2008.

"There's still a lot of uncertainty and we're likely to see a lot of volatility early in the year as we could be in a mild recessionary environment,"

Angelo Kourkafas, Investment Strategist at Edward Jones

Kourkafas said he expected more volatility at the beginning of 2023, even warning about the possibility of a mild recession in the U.S. The investment strategist, however, added that the market was prepared to face a weaker economy.

"We still have some headwinds ahead but maybe we don't have to price in a recession twice. So far what we've seen this year has already priced in a mild recession."

U.S. dollar against yen

In the earlier months of the Fed’s tightening cycle, the U.S. dollar gained significant strength that had not been seen in decades. The greenback, however, grew weaker in the past month.

The Japanese central bank also recently announced plans to widen the trading band for its 10-year government bonds, which could harm the greenback’s standing against the yen. Following the Bank of Japan’s announcement, the dollar plunged four percent against the yen. The currency regained strength on Wednesday, gaining 0.4 percent to rise to 132.28 yen.

Goldman Sachs said the greenback would be able to rise again in the coming days. The investment bank predicted that the BoJ would adjust some parts of its new policy.