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S&P 500 comes roaring back after reaching 2022 low

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New York Stock Exchange, Wall st, New York, USA

Markets rally, but is it just a temporary respite for investors?

The S&P 500 rallied just a day after reaching a fresh low, following the Bank of England's decision to protect its bond market.

The S&P 500 rose 1.97% to 3,719.04, while the Dow jumped 548.75 points, or 1.88%, to 29,683.74. The biggest winner overnight was the tech-heavy Nasdaq Composite which was up 2.05% throughout the day's trading.

This now means the S&P 500 is down 24.3% from its January highs.

The FTSE 100 was marginally up, while Australia's ASX 200 is showing strong growth during pre-market trading.

Why the sudden reversal?

Once again the main theme of the market is the British pound.

Over the last week, investors have been selling their stocks, as the UK government cuts the tax rates.

Now usually this is a sign the government wants to speed up consumer spending.

But during a period of high inflation it is unusual.

As such, markets took it as a sign of a recession in the UK causing a massive pull-back.

The price of the pound collapsed.

To stop the bleeding, the Bank of England (BoE) stepped in, lifting its bond-buying activity, which calmed investors.

According to Saxo Bank's market strategist Jessica Amir, the central bank's decision is giving investors some respite.

"This seems to have tentatively calmed markets, while end of month and quarter rebalancing could also be supporting stocks momentarily," Amir said.

Temporary lift, but more signs of pain to come

While the market is focusing on the pound, there are other warning signs for the economy.

But Amir noted there was some mixed news for investors.

"Nasdaq was bolstered by gains from Amazon with its shares gaining 3.2% after it pushed further into wellness, security and the auto industry," she said.

But at the same time Apple ditched iPhone production after it failed to increase demand following the release of its newest phone.

According to reports, the tech giant is telling suppliers to pull back from efforts to increase assembly of the iPhone 14 by as many as 6 million units in a sign that the global economy is slowing.

"Apple's shares sank about 1.3% on news it is not increasing iPhone production, which casts doubt over the outlook for consumer spending," she said.

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