Dow closes more than 400 points higher, Nasdaq snaps 7-day slump as Wall Street shakes off rate hike concerns

Stocks rallied Wednesday as Wall Street looked past concerns about aggressive rate hikes coming from the Federal Reserve.

The Dow Jones Industrial Average gained 435.98 points, or 1.40%, to end the day at 31,581.28. The S&P 500 rose 1.83% to 3,979.90 and the Nasdaq Composite ticked up 2.14% to 11,791.90, breaking a seven-day losing streak.

—Carmen Reinicke

Shares of many well-known airlines rose Wednesday after United Airlines raised its third-quarter sales forecast and reported strong demand, despite the end to the peak summer travel season, helping lift airline shares.

"We're seeing a really strong September," said Patrick Quayle, United's senior vice president of global network planning and alliances during a Cowen industry conference. "It does not appear that summer has come to an end. It's that strong."

United Airlines stock jumped 5% after the report. Here's how much other airline stocks jumped today:

American Airlines: +4.69%

Delta Air Lines: +3.32%

Southwest Airlines: +2.53%

—Carmen Reinicke, Leslie Josephs

All three major averages were near session highs heading into the last hour of trading Wednesday. The Dow Jones Industrial Average gained 470 points, or 1.51%. The S&P 500 jumped 1.87%. The Nasdaq Composite rose 2.14%, looking to break a seven-day loss streak, its longest since 2016.

Almost every sector in the S&P 500 was positive Wednesday except for energy, which slumped with oil prices.

- Carmen Reinicke

The makeup of Wednesday's market rally doesn't look like a true reversal after three weeks of selling, said Andrew Smith, chief investment strategist at Delos Capital Advisors.

"If the path was all clear ... utilities [sector] should not be where it's at — and it's up today — from a performance standpoint. And on an equal weighted basis, it's up 10% for the year," Smith said. "There's still a defensive tilt to the market."

The Utilities Select Sector SPDR Fund was up 2.9% on Wednesday afternoon, easily outpacing the broader market.

Smith said he was using today's moves as an opportunity to sell some stock and raise additional cash.

— Jesse Pound

Federal Reserve Vice Chair Lael Brainard said in a speech Wednesday that the central bank is ready to fight inflation for as long as it takes to bring consumer price increases in check.

That means the pace of rate hikes needs to continue and that the central bank's benchmark rate will need to stay high for longer, she noted.

Brainard said that having rates higher for longer is necessary to make sure that inflation is truly coming down.

"It may take some time for the full effect of these tighter financial conditions to work their way through the economy," she said, adding "The disinflationary process here at home should be reinforced by weaker demand and tightening in many other countries."

Still, Brainard also noted there is a risk of going too far and said the Fed should be careful to avoid overtightening. Markets rallied on the news.

"At some point in the tightening cycle, the risks will become more two-sided," she said. "The rapidity of the tightening cycle and its global nature, as well as the uncertainty around the pace at which the effects of tighter financial conditions are working their way through aggregate demand, create risks associated with overtightening."

- Carmen Reinicke

The Federal Reserve's Beige Book, a report of economic activity, showed that such activity was unchanged in the last six weeks.

Most districts noted slight to modest softening in their district. At the same time, consumer spending remained relatively stable with a small drop in spending on autos. Overall, the growth outlook remains generally weak for the U.S. economy going forward.

- Carmen Reinicke, Steve Liesman

The Dow Jones Industrial average rallied to session highs of more than 330 points on Wednesday as Wall Street looks to shake off a three-week slump.

The S&P 500 and the Nasdaq Composite also jumped, with the latter on track to snap a seven-day loss streak. The moves higher came as oil prices slipped, easing fears that inflation will continue to be high and warrant more aggressive rate hikes from the Federal Reserve.

-Carmen Reinicke

All three major averages gained during Wednesday's session, looking to snap a three-week slide. The Nasdaq Composite's performance was especially one to watch as just a day earlier the index notched a seven-day streak of losses, its longest since 2016.

In midday trading Wednesday, the Nasdaq Composite had gained about 1.25%, lifted most by health technology stocks. DexCom was the top performer on the index, up 5.86%. Regeneron Pharmaceuticals, Intuitive Surgical and IDEXX Laboratories also lifted the index, up 3.5%, 3.4% and 3.07% respectively.

Popular tech names led the Nasdaq 100, the large cap index. The top performers on the Nasdaq 100 were Microsoft, Amazon and Alphabet, all up more than 1%.

— Carmen Reinicke

Microsoft CFO Amy Hood sold roughly $19.5 million of the company's stock last week, according to a securities filing released Tuesday.

While this is a sizeable sale, it is not unusual for Hood. She has sold more than 10% of her shares in Microsoft in September in each of the past five years, according to InsiderScore.com.

Hood still owns more than 445,000 shares of the stock after this latest sale, according to the securities filing. That stake is worth roughly $114 million based on where the stock was trading on Wednesday.

Shares of Microsoft were last up about 0.8% for the session.

—Jesse Pound

Federal Reserve Vice Chair Lael Brainard pledged on Wednesday to continue the central bank's flight against inflation, saying that rising prices were hurting lower income households.

"We are in this for as long as it takes to get inflation down," Brainard said in prepared remarks for a speech in New York. "So far, we have expeditiously raised the policy rate to the peak of the previous cycle, and the policy rate will need to rise further."

Brainard said there was some examples of prices coming down in the retail sector but that there "also could be scope for reduction" in the profit margins of auto companies in particular.

— Jesse Pound, Jeff Cox

Here are some of Wednesday's biggest movers:

• Twitter — The social media stock jumped 5.3% after a Delaware court shut down Elon Musk's request to postpone a trial focused on his move to abandon a $44 billion deal to purchase Twitter. The court, however, said it would allow Musk to add claims from a Twitter whistleblower to his countersuit.
• UiPath — Shares tumbled 12.7% after UiPath issued weaker-than-expected third-quarter and full-year revenue guidance, despite beating earnings and revenue expectations in its most recent quarter.
• ChargePoint — The stock advanced 6.8% after Credit Suisse initiated coverage with a buy rating. The firm said shares of the electric vehicle charging station operator can jump roughly 50% from here.

Read the full story here.

— Sarah Min

The price of bitcoin fell below $19,000 on Wednesday morning and has been hovering above its low of the year. The cryptocurrency has since turned positive but is still trading at just about $18,900, according to Coin Metrics.

Unlike ether and other cryptocurrencies, bitcoin's price trades in tandem with the stock market and tends to be a sentiment indicator of risk appetite. Its midday rebound coincided with the rebound in stocks.

— Tanaya Macheel

Shares of Netflix jumped more than 2.5% Wednesday after a Wall Street Journal report that the company is looking to cut costs to save money amid slowing subscriber growth.

That includes limiting corporate swag, looking at real estate, controlling cloud-computing costs and even hiring more junior staff, according to the article.

—Carmen Reinicke

BTIG's Jonathan Krinsky said a retest of the bear market lows is now more likely as rates and the U.S. dollar soar.

"The unrelenting upward pressure on rates and the dollar suggest this bear market likely has one more surprise, and the June lows need to be back in the conversation," Krinsky said.

"While we previously thought the June lows would hold given the SPX's 50% retracement of its bear market decline, we should note that the [Nasdaq] reclaimed more than 50% of its decline in 2000 before making new lows," he added. "Given the high weight of tech in the SPX presently, perhaps it is acting more like the high-beta Nasdaq did twenty years ago."

— Fred Imbert, Michael Bloom

Investors are poised to respond to the next FOMC meeting before it happens on Sept. 20-21, rather than after, according to equity derivatives analysts at Bank of America led by Vittoria Volta.

So far in 2022, the S&P 500 index has experienced "more downside and nearly as much volatility in the week prior to the FOMC's than the week of the meeting," the BofA analysts wrote in a note Wednesday.

There are two other reasons for investors to steel themselves and prepare for risks next week rather than the week after, the bank said.

August's Consumer Price Index is released at 8:30 a.m. next Tuesday, September 13, the last big data point central bank policymakers will see before their meeting that will help gauge progress on the inflation front.

And, as was true in June when a Wall Street Journal scoop broke the news that the FOMC was considering a three-quarters point rate increase rather than a half point, there's always the chance of a "possible rate decision leak" to the press this month too, BofA said.

— Scott Schnipper, with CNBC's Michael Bloom

"The Big Short" investor Michael Burry, best known for calling the subprime mortgage crisis, issued another dire prediction in a cryptic tweet, hinting that a 2000 and 2008 style market bubble could be on its way to popping in 2022.

The founder of Scion Asset Management said the stock market has not yet hit a bottom, and he urged investors to look for signs of "failures" before a trough can be reached.

— Yun Li

After rising sharply across the board on Tuesday, Treasury yields are in retreat on Wednesday.

The 10-year Treasury yield dipped nearly five basis points to 3.294%. The 2-year and 30-year yields are also down for the day. Yields move opposite of prices.

Treasury yields have been moving in response to market expectations about rate hikes and inflation. Wednesday's decline could be a reflection of investors getting more confident in the medium-term path of inflation.

— Jesse Pound

Oil prices slipped Wednesday to their lowest levels since Russia invaded Ukraine on fears of what global economic uncertainty and recession risk means for demand.

West Texas Intermediate crude fell 3.7% to $82.93 a barrel, the lowest level since Jan. 24. Brent crude futures slipped 3.4% to hit $88.92 a barrel, its lowest level since Feb. 3.

Natural gas also fell.

- Carmen Reinicke, Gina Francolla

The British pound fell on Wednesday and hit its lowest level against the dollar since 1985.

The fall came as British investors reacted to the weakening economy and new Prime Minister. The pound fell to $1.14 against the dollar.

- Carmen Reinicke

Shares of Twitter jumped 4.5% Wednesday morning after a Delaware court denied Elon Musk's request to delay the trial over his attempt to back out of buying the company for $44 billion. The trial is expected to begin Oct. 17.

Musk will be able to add claims from a Twitter whistleblower to his case, however, the judge ruled.

- Carmen Reinicke, Lauren Feiner

Wheat futures surged over 5.8% Wednesday morning, hitting a high of 866 1/2 cents per bushel. It's the highest level for wheat futures since July 12.

The moves came after Russia questioned a war-time export deal for Ukraine. Putin said that he wants to limit destinations for Ukraine exports. In addition, Russia's criticism of the deal adds to fears about supply disruption, especially in the Black Sea.

— Carmen Reinicke, Gina Francolla

Energy was the worst-performing S&P 500 sector in early trading, as crude prices tumbled. The sector traded more than 2% lower, led down by shares of APA and Baker Hughes. Meanwhile, utilities was the index's best performer with a 1.8% gain.

— Fred Imbert

All three major averages were flat at Wednesday's open after dipping in early market trading. The Dow Jones Industrial average slipped 26 points, while the S&P 500 was flat. The Nasdaq Composite ticked up slightly, 0.27%.

Investors continue to weigh the possibility that the Federal Reserve will hand out another 0.75 percentage point rate hike in September, which would be its third of that size in a row.

- Carmen Reinicke

Goldman Sachs (London) said Wednesday that reading the tea leaves from two in-house indicators suggests stocks "are not yet at the market trough."

Analysts led by Peter Oppenheimer, Goldman's chief global equity strategist and the head of macroeconomic research in Europe, cited Goldman's "Bull/Bear Market indicator" and its "Risk Appetite indicator," which attempt to capture fundamentals and sentiment, respectively.

The two indicators are key "when they are both close to extremes," especially at times when the market is at a crossroads, Goldman said.

Unfortunately, neither one is.

"Something has to give: either returns stay low and volatile for a long time or the market is likely to re-test its lows before a genuine trough is established," the Goldman analysts wrote.

— Scott Schnipper

It's possible that investors could see equities rally in the near-term after a three-week slide, but more likely that they'll continue to struggle amid global uncertainty, Emmanuel Cau of Barclays wrote in a Wednesday note.

"With equities pretty much back to the June lows, the tactical risk-reward feels better: complacency is gone, positioning is cleaner, technicals look oversold and rates expectations look more realistic," he said, adding that evidence of slowing inflation, along with decisive EU government intervention to tackle the energy crisis, could lift sentiment.

"So another bounce is possible, but big picture, we think equities remain in a tough spot," he said.

—Carmen Reinicke

Markets appear to have settled on a third consecutive three--quarter point interest rate increase from the Federal Reserve later this month.

Fed fund futures swung sharply higher Wednesday morning, with traders now pricing in an 86% chance that the Federal Open Market Committee will approve a 0.75 percentage point rate increase when it meets Sept. 20-21, according to the CME Group's FedWatch tracker.

That's up from 73% the day before and 69% a week ago.

Stock market futures turned slightly negative amid the more aggressive trader sentiment.

Fed Chairman Jerome Powell jolted investors in an Aug. 26 speech from the central bank's Jackson Hole, Wyo. retreat when he said he expects hikes to continue and for rates to remain at elevated levels until inflation comes down. The Fed is battling inflation running near its highest level in more than 40 years.

Powell will speak again Thursday in a question-and-answer session at the Cato Institute.

—Jeff Cox

Pinterest shares rose more than 4% after Wolfe Research upgraded the social media company to outperform from peer perform.

"Our bullish view is centered on PINS's LT user growth and monetization potential under the new CEO. Despite uncertain macro, we see many positive catalysts over next 12-18 months," Wolfe wrote.

CNBC Pro subscribers can read the full story here.

— Fred Imbert

Mortgage applications to purchase a home fell another 1% last week and are down 23% year over year as mortgage rates push toward 6% again, according to the Mortgage Bankers Association.

The average interest rate for mortgages with conforming loan balances was 5.94% last week, up from 5.80% in the prior week, according to the MBA.

Applications to refinance a mortgage also fell 1% and are now down 83% year over year.

— Jesse Pound, Diana Olick

Shares of Newell Brands fell more than 4% in the premarket after the consumer goods company cut its third-quarter and full-year guidance.

The company expected third-quarter revenue to range between $2.21 billion and $2.32 billion after previously guiding for revenue of $2.39 billion to $2.5 billion. For the full year, Newell now sees earnings per share ranging from $1.56 to $1.70, down from a previous range of $1.79 to $1.86.

"Although we remain enthusiastic about the back-to-school season and continue to see solid growth in the Commercial business, we have experienced a significantly greater than expected pullback in retailer orders and continued inflationary pressures on the consumer," CEO Ravi Saligram said in a statement.

— Fred Imbert

Bitcoin prices traded below $19,000 on Wednesday to reach their lowest levels since June as traders grapple with declines in the stock market and a strengthening dollar.

As of 5:51 a.m. ET, the digital currency traded at $18,800.60.

"The macro environment also continues to prove difficult with the dollar continuing to put in highs. This impacts all risk assets as we can see," Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC.

— Arjun Kharpal

Richmond Fed President Thomas Barkin said in an interview with the Financial Times he has a bias toward "moving more quickly" rather than slowly.

"I have a bias in general towards moving more quickly, rather than more slowly, as long as you don't inadvertently break something along the way," he told the newspaper, adding policymakers are likely to continue hiking rates until they are "convinced" that inflation is under control.

"The destination is real rates in positive territory and my intent would be to maintain them there until such time as we really are convinced that we put inflation to bed," he said to the FT.

The probability of a 75-basis-point hike at September's FOMC meeting rose to 74.0% as of early Wednesday morning U.S. time, according to the CME Group's FedWatch tool. The chance for a 50-basis-point hike now stands at 26%, FedWatch showed.

–Jihye Lee

The parent company of brands such as Yankee Candle and Rubbermaid saw its shares fall 3.8% in extended trading, after revising its third-quarter revenue guidance, forecasting less than what it had previously expected.

The company CEO said Newell has experienced "a significantly greater than expected pullback in retailer orders and continued inflationary pressures on the consumer."

Newell fell 2.5% in the previous session. The stock is down about 21% this year.

— Tanaya Macheel

When stocks rallied off their summer lows, many investors were skeptical about how long it could really last. Traders can't rule out the possibility that the bounce was a temporary trap, but nevertheless, there's a lot to be encouraged by in the market, he said in a note late Tuesday.

"As quick and nasty as this latest S&P 500 plunge has been, its 'undertones' seem much healthier," he said. "Whereas stock losses in the first half destroyed the returns of the most aggressive investments, this downturn seems abnormally concentrated among large-company growth stocks, if not simply large-cap tech stocks."

"In our view, it is heartening to see small caps, cyclicals, high-beta, and low-quality perform so well in such a sharp market drop," he added. "Unlike the first half of 2022, the undertones of the market downswing suggest the possibility of a much more favorable outcome than many now fear."

— Tanaya Macheel

U.S. equities futures opened little changed on Tuesday night after the major averages added to weeks of losses earlier in the session.

Futures tied to the Dow Jones Industrial Average dipped 21 points. S&P 500 futures fell slightly by 0.08% and Nasdaq 100 futures lost 0.05%.

— Tanaya Macheel