US STOCKS-Wall Street extends rally as economically sensitive sectors bounce

·3 min read

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  * Business activity growth slows as expected 

  * Weekly jobless claims rise 

  * Accenture, Salesforce up on raising forecasts 

  * Indexes surge: Dow 1.22%, S&P 1.02%, Nasdaq 0.81% (Updates to market open) 

  By Ambar Warrick 

  Sept 23 (Reuters) - Economically sensitive stocks boosted Wall Street on Thursday as investors largely brushed off concerns over the Federal Reserve's plans for tapering, while forecast raises from Accenture and Salesforce added to the positive mood. 

  The Fed said on Wednesday it could begin reducing its monthly bond purchases by as soon as November, and that interest rates could rise quicker than expected by next year. 

  The central bank also projected inflation at 4.2% by the year-end, more than twice its target rate of 2.0%. Still, the bank remained optimistic over a return to economic normalcy by next year. 

  Financial stocks were the best performers in early trade, jumping 1.7% on expectations of higher lending rates. 

  Commodity-linked sectors rose on hopes of a pickup in demand, as well as strong oil and metal prices due to supply constraints. 

  IT services provider Salseforce.com Inc jumped 4% and was among the top boosts to the S&P and the Dow after it hiked its annual earnings forecast. 

  Accenture added nearly 2% after the IT consulting firm raised its first-quarter outlook. 

  Investors shrugged off data showing a slowdown in business activity growth and a rise in jobless claims, in line with expectations for a slowdown in economic growth in the third quarter. 

  "The Fed's stance is still accommodative and it's reasonable for the Fed to want to return to a state of normalcy if the economy is as robust as (recent) data suggests," said Mike Loewengart, managing director, investment strategy at E*TRADE Financial. 

  Data last week showed a surprise jump in retail sales, suggesting that consumer spending, a key gauge of economic growth, remained strong despite the impact of the Delta variant of the coronavirus. 

  "Given the recent volatility, it's likely that investors are viewing the taper projection and potential 2022 rate hikes as a vote of confidence that the recovery is on track," Loewengart said. 

  At 09:59 a.m. ET the Dow Jones Industrial Average rose 419.61 points, or 1.22%, to 34,677.93, the S&P 500 gained 44.99 points, or 1.02 %, to 4,440.63, and the Nasdaq Composite gained 121.09 points, or 0.81 %, to 15,018.70. 

  The Fed's November deadline had been largely priced in by markets. Relief over the Fed, along with easing concerns of a default by Chinese property developer Evergrande, saw all three Wall Street indexes jump around 1% on Wednesday. 

  The Dow and the S&P were set for their best day in two months, as they staged a strong recovery from two-month lows hit earlier this week. 

  Wall Street indexes are still trading lower for the month, owing to seasonally weak trends, as well as concerns over fiscal spending and a slowdown in economic growth. 

  Advancing issues outnumbered decliners for a 3.8-to-1 ratio on the NYSE and a 2.7-to-1 ratio on the Nasdaq. 

  The S&P 500 posted 18 new 52-week highs and 3 new lows, while the Nasdaq recorded 70 new highs and 25 new lows. (Reporting by Ambar Warrick in Bengaluru; Editing by Maju Samuel and Shounak Dasgupta) 

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