LONDON: U.S. stocks rallied on Wednesday as a Federal Reserve report painted a more optimistic economic picture, soothing worries about the possible impact of the slowdown in China on the U.S.
The Federal Reserve’s Beige Book said several district banks “reported increasing wage pressures caused by labor market tightening” a change from earlier reports that noted higher pay in isolated sectors. But there were also indications that the strong dollar and the drop in oil prices were depressing activity, which could argue for holding off on raising interest rates at the Sept. 16-17 policy meeting.
“If the markets were looking for significant spillover from China or significant deterioration in U.S. economy in latest Beige Book, it’s not there,” said John Canally, chief economist strategist at LPL Financial.
The S&P 500 SPX, +1.83% closed up 35.01 points, or 1.8%, to finish at 1,948.86. The Dow Jones Industrial Average DJIA, +1.82% gained 293.03 points, or 1.8%, to end at 16,351.38, while the Nasdaq Composite Index COMP, +2.46% picked up 113.87 points, or 2.5%, to close at 4,749.98, put the tech laden back in positive territory.
Anticipation that the European Central Bank could announce further stimulus on Thursday also helped to lure some investors back to the stock market, according Ian Winer, director of equity trading at Wedbush Securities.
The ECB will hold its regular policy meeting Thursday morning, followed by a news conference.
