Another rally on Wall Street erases losses for the week

Stocks rose broadly for a second day in a row on Wall Street Thursday, reversing the market’s losses for the week just three days after the S&P 500 had its biggest skid since May. The S&P 500 added 1.2% and the Dow Jones Industrial Average rose 1.5%. Investors were pleased to have gotten some clarity from the Federal Reserve a day earlier that it was not on the verge of raising interest rates, and there was also reassuring news out of China, where Evergrande, one of the country’s biggest private real estate developers, appeared to avoid what could have been a messy default.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

Stocks on Wall Street were broadly higher in afternoon trading Thursday, erasing weekly losses for most of the major indexes.

The rally extends the gains from a day before, when the Federal Reserve signaled it may begin easing its extraordinary support measures for the economy later this year.

The S&P 500 index was up 1.5% as of 2:13 p.m. Eastern. The benchmark index is now within 1.7% of the all-time high it set on Sept. 2. The Dow Jones Industrial Average rose 584 points, or 1.7%, to 34,842 and the Nasdaq rose 1.1%.

Nearly every stock in the S&P 500 rose. It’s now up 0.6% for the week and has recovered from a from a sharp sell-off on Monday. The turnaround is more pronounced within the Dow, which is now up 0.8% for the week after having been down 1.9% for the week as of Tuesday.

The change in investor sentiment has also put oil prices in the green. Benchmark U.S. crude oil is now up 1.4% for the week. Bond yields moved solidly higher. The yield on the 10-year Treasury rose to 1.39% from 1.32% late Wednesday.

Technology companies and banks led the way higher. Cloud-based software company Salesforce.com was a standout with a 7.1% gain after raising its sales forecast for the year. Citigroup rose 4.2%.

Small-company stocks, which are typically a good measure of investor confidence for economic growth, also jumped over to the winning column. The Russell 2000 is up 12.1% for the day and 1.3% for the week.

Other standouts included Olive Garden owner Darden Restaurants. Its stock jumped 6% after delivering strong quarterly results.

Investors got some reassuring news out of China, where Evergrande, one of the country’s biggest private real estate developers, said it will make a payment due Thursday on a domestic bond. Concerns about the potential for a default jarred global markets earlier in the week.

European and Asian markets rose.

The Federal Reserve on Wednesday indicated it may start raising its benchmark interest rate sometime next year, earlier than it envisioned three months ago. It also said it will likely begin slowing the pace of its monthly bond purchases “soon” if the economy keeps improving. The Fed and other central banks have been buying bonds throughout the pandemic to help keep long-term interest rates low.

“The reality is that the Fed is going to err on side of not tightening anything on inflation until they absolutely have to,” said Brent Schutte, chief investment strategist, Northwestern Mutual Wealth Management Company. “They are going to stick around as long as they possibly can.”

The central bank has been closely watching job growth to get a better gauge of the economic recovery. The jobs market has seen a choppy recovery amid a resurgence of COVID-19 with the highly contagious delta variant. The Labor Department’s latest update shows that the number of Americans applying for unemployment aid rose last week for a second straight week to 351,000.

Markets have had a rough September and investors could be in for more choppiness as they work through a mix of concerns, Schutte said. That includes COVID-19 and its lingering impact on the economy, along with a slow recovery for the employment market and the Fed’s position on support.

“People got so used to a one-way market,” he said. “It’s going to be more of two-way market and investors need to get used that, but I still think the trend is higher.”