Dow soars 700 points for 2nd straight day of gains

Stocks rose sharply on Wall Street Tuesday, clawing back more of the ground they lost in a miserable several weeks.

The Dow Jones Industrial Average surged 825.43 points, or 2.8%, to 30,316.32 and the Nasdaq jumped more than 350 points, or 3.3%.

The S&P 500 rose 3.1%. The benchmark index has been rallying since hitting its lowest point of the year on Friday to close out a September slump. European and Asian markets also made solid gains.

The broad gains come as major indexes remain in a bear market after falling 20% or more from their most recent record highs. The two-day rally is hitting markets as investors look for signs that central banks might ease up on their aggressive rate hikes aimed at taming the hottest inflation in four decades.

Australia’s central bank made an interest rate hike that was smaller than previous ones and that helped Australia’s market jump 3.8%. It is a potentially positive signal for investors, along with the latest jobs data from the US.

Investors in the US received potentially encouraging news from a government report on job openings that showed the number of available jobs in the US plummeted in August compared with July. It’s a sign that businesses may pull back further on hiring and potentially cool chronically high inflation.

The optimism could be misguided as inflation remains stubbornly hot, said John Lynch, chief investment officer for Comerica Wealth Management.

“Investors should be worried about false positives,” he said. “Be wary of the history of bear market rallies, they can be very seductive.”

Shares of Twitter soared 22% to $52 after billionaire Elon Musk proposed going ahead with his original offer of $54.20 to take the social media company private.

Major indexes could be in store for more declines ahead, he said, as more economic data and the next round of earnings reports paints a clearer picture of how inflation continues to impact business operations and consumer spending.

Treasury yields continued to pull back from their multiyear highs, which has helped relieve some of the pressure on stocks. The yield on the 10-year Treasury, which helps set rates for mortgages and many other kinds of loans, fell to 3.59% from 3.65% late Monday. It got as high as 4% last week after starting the year at just 1.51%.

Central banks are being closely watched as they raise interest rates to make borrowing more difficult and slow economic growth to try to tame inflation. Investors are hoping that they will eventually ease off their aggressive rate hikes and the move by Australia’s central bank is a hopeful sign for some.

Wall Street is worried that the rate hikes, especially the increases from the Federal Reserve, could go too far in slowing growth and send economies into a recession. The Fed has already pushed its key overnight interest rate to a range of 3% to 3.25%, up from virtually zero as recently as March.

Economic growth is already slowing globally and the US economy contracted during the first two quarters of the year, which is considered an informal signal of a recession. The economy still has several strong pockets, including employment. Wall Street will get a more detailed look at the employment situation in the US when the government releases its monthly jobs report for September on Friday.