Finder makes money from featured partners, but editorial opinions are our own.

S&P 500 records best day since July: Here’s why

Share trading_Getty_1800x1000

Wall Street rallies off 4 key economic policies.

Wall Street has had its best day in months, after the UK dumped its controversial tax cuts and US manufacturing fell.

Combined, it eased fears of continuing rate hikes.

In response, the Dow Jones surged almost 3%, while the S&P 500 was up 2.9% and the Nasdaq Composite added 2.7%.

Meanwhile Australia's ASX 200 started the morning strongly.

Saxo's market strategist Jessica Amir points out there were a few factors that excited investors.

"Firstly, the UK government did a U-turn and will reverse plans to scrap the top rate of income tax," she said.

Adding to it was the United Nations calling on the Federal Reserve (the Fed) to halt interest rate hikes.

"Thirdly, what also boosted sentiment was that 2 Fed speakers at the weekend, Brainard and Daly were reportedly discussing the downside of hiking too fast."

"And fourthly, weaker than expected US economic news came out with; US manufacturing falling for the third time in 4 months."

Why is US manufacturing falling good for markets?

The stock market responded positively to the news that US manufacturing activity grew at its slowest pace in nearly 2.5 years.

While this might sound like bad news for the economy, remember inflation is still running rampant.

And the markets are closely watching interest rates.

Combined, a weakening manufacturing sector suggests inflation could slow, which in turn limits how quickly the Fed needs to lift interest rates.

Is it simply a relief rally?

Despite an upbeat market, Global X ETFs' chief investment officer Jon Maier opines the worst might not be over for the S&P 500.

Instead, he points out the good news overnight could've been a relief rally, with the economy still under pressure.

"We expect macro headwinds will continue to pressure US corporate earnings in the coming months, which warrants a lower exposure to global factors, particularly those stemming from a strong dollar and Europe," Maier said.

Looking for a low-cost online broker to invest in the stock market? Compare share trading platforms to start investing in stocks and ETFs.

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involve substantial risk of loss and therefore are not appropriate for all investors. Past performance is not an indication of future results. Consider your own circumstances and obtain your own advice before making any trades.

Ask a Question

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our 1. Terms Of Service and 6. Finder Group Privacy & Cookies Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Go to site