US STOCKS-Wall Street gathers on the first day of October, boosted by economic joy

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Oct. 1 (Reuters) – Wall Street shares surged to a higher close on Friday, kicking off the fourth quarter in a buying mood boosted by positive economic data, progress in the battle against COVID and Washington’s developments on the potential adoption of a bill on infrastructure.

The three major US equity indices hovered earlier in the session, but started to rise in the late afternoon, led by cyclical economy-sensitive stocks.

The rally gathered momentum after the White House announced that US President Joe Biden was getting more involved in negotiations on the infrastructure spending bill being debated on Capitol Hill.

Despite this, all three indices finished below last Friday’s close, with the S&P 500 and Nasdaq Composite recording their biggest weekly percentage declines since February.

“There was a general recovery today. The markets weren’t fixated on the new taxes or the phase-out today, ”said David Carter, chief investment officer at Lenox Wealth Advisors in New York.

“Compared to the past few weeks, there has been no big news from Washington, so markets have been forced to focus on positive economic data and a new COVID drug.”

Merck & Co Inc has revealed that a recent study showed that its investigational oral drug for COVID-19 reduced the risk of death and hospitalization by about 50%, boosting its shares and bolstering feelings of economic reopening.

While Biden enacted an interim bill to keep the government running until Dec. 3, lawmakers have only succeeded in kicking the box.

This lack of resolution prompted the Fitch rating agency to warn that the United States’ “AAA” credit rating could be at risk.

“The markets don’t think the debt will be downgraded or that a debt ceiling deal will not be reached, but it adds further uncertainty which is always a problem for the markets,” added Carter.

A slew of economic data released on Friday showed increased consumer spending, accelerating factory activity and high inflation growth, which could help the US Federal Reserve shorten its schedule to tighten its policy. accommodative monetary policy.

Philadelphia Fed Chairman Patrick Harker reiterated his point of view expressed on Wednesday in a speech that he believed the central bank should start cutting asset purchases “soon,” but reiterated that he would not. did not expect it to raise its key interest rates before the end of next year or early 2023..

Unofficially, the Dow Jones Industrial Average rose 488.73 points, or 1.44%, to 34,332.65, the S&P 500 gained 49.88 points, or 1.16%, to 4,357.42 and the Nasdaq Composite added 108.76 points, or 0.75%, to 14,557.34.

All 11 major sectors of the S&P 500 ended higher, with health care stocks trailing behind.

Industry gains were capped by a drop in shares of COVID vaccine maker Moderna Inc following Merck’s announcement.

Economic optimism prompted value stocks to outperform growth, and transportation and small caps to fare better than the broader market. (Reporting by Stephen Culp; Editing by Richard Chang)

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