Stocks rose on Wednesday, especially in Asia. Japan’s Nikkei 225 index fell shortly after the open, but then recovered as the index climbed back up.
The Nikkei index was up 2.3% at 35,464.61 by mid-morning.
It had risen more than 10% on Tuesday, recovering much of the losses it had suffered. worst day since 1987.
The gains followed comments from a Bank of Japan official who noted that while the central bank had raised interest rates, interest rates a week earlier, from 0.1% to 0.25%, monetary policy remains lax.
The rate hike, however modest, set off a domino effect of selling by traders to adjust to higher costs for carry trades — a favorite trade for hedge funds and other investors – as a result of higher interest rates and a rise in the value of the Japanese yen against the US dollar.
The dollar rebounded sharply against the yen early Wednesday, jumping to 146.47 yen from 144.44 late Tuesday. A weaker yen typically helps the profits of export manufacturers that earn most of their revenue abroad, and a rise in the yen after the BOJ’s rate hike led to big gains for the Japanese currency late last week.
In recent months, the dollar has traded at 160 yen, its highest level in nearly four decades.
The unwinding of carry trades and concerns about the outlook for the US economy sent markets tumbling late last week and into Monday’s session.
Elsewhere in Asia, Hong Kong’s Hang Seng was the outlier on Wednesday, down 0.3% to 16,647.34. The Shanghai Composite index rose 0.2% to 2,873.25.
South Korea’s Kospi rose 2.6% to 2,587.78 and Taiwan’s benchmark rose more than 3%. Both markets were among the biggest losers in Monday’s selloff, amid a heavy focus on technology stocks that have suffered the biggest losses in recent weeks.
The S&Australia’s P/ASX 200 rose 0.4% to 7,712.20.
On Tuesday is the S&P500 rose 1%, breaking a brutal three-day record losing streakIt was down just over 6% on a series of concerns, including worries that the Federal Reserve had hit the brakes too hard for too long American economy Through high interest rates to beat inflation.
The S&The P 500 rose 53.70 points to 5,240.03. The Dow rose 294.39 points, or 0.8 percent, to 38,997.66, and the Nasdaq gained 166.77 points, or 1 percent, to 16,366.85.
Stocks of all shapes and sizes rose in a mirror image of the day before, from smaller companies that rely on U.S. household spending to large multinationals that are more dependent on the global economy.
Stronger-than-expected earnings reports from several major U.S. companies helped drive the market. Kenvue, the company behind Tylenol and Band-Aids, rose 14.7% after reporting stronger-than-expected earnings, helped by higher prices for its products. Uber rose 10.9% after easily beating earnings estimates for its latest quarter.
Caterpillar rose 3% after the heavy equipment maker reported better-than-expected profit.
While fears of a slowing U.S. economy are growing, they are still growing, and many economists see a recession in the next year or so as unlikely. The U.S. stock market is also still up sharply for the year so far, and the Federal Reserve says there is plenty of room to cut interest rates to help the economy if the labor market weakens significantly.
The S&P500 has hit dozens of record highs this year and is still up nearly 10% so far in 2024, partly due to a madness surrounding artificial intelligence technology. Critics say euphoria has in many cases pushed stock prices too high.
In the bond market, U.S. Treasury yields rose, reversing some of the sharp declines since April that were driven by rising expectations of upcoming rate cuts by the Federal Reserve.
The yield on the 10-year Treasury note rose to 3.88% from 3.78% late Monday. It had briefly fallen below 3.70% on Monday as market fears mounted and investors speculated that the Federal Reserve might have to call an emergency meeting to cut rates quickly.
In other trading early Wednesday, benchmark U.S. crude fell 15 cents to $73.05 a barrel. Brent crude, the international standard, fell 17 cents to $76.31.
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AP Business journalists Stan Choe and Matt Ott contributed.