by Caroline Valetkevitch

NEW YORK (Reuters) – The New York Stock Exchange ended higher on Tuesday, rebounding from a deep low the previous day as investors appeared to be reassured by comments from U.S. Federal Reserve officials on the economic outlook.

The Dow Jones index gained 0.76%, or 294.39 points, to 38,997.66 points.

The broader S&P 500 gained 53.70 points, or 1.04%, to 5,240.03.

The Nasdaq Composite rose 166.77 points (1.03%) to 16,366.86 points.

After rising sharply during the session, the three main Wall Street indices saw their gains narrow shortly before the close.

U.S. central bank officials have dismissed the idea that disappointing July U.S. jobs data indicate a coming recession. They also warned that the Fed must cut interest rates to avoid such a scenario.

The market has reassessed its positions and “people are starting to think again that lower rates should support stocks,” said Rick Meckler, a principal at Cherry Lane Investments in New Jersey.

According to FedWatch, traders are 75% betting on a 50 basis point rate cut at the Fed’s September meeting.

Fears of a recession in the United States have sent Wall Street’s main indices plunging, with market nervousness fuelled by the unwinding of a carry strategy following an unexpected rate hike announced last week by the Bank of Japan (BoJ).

Investors are particularly looking forward to the speech that Fed Chairman Jerome Powell is due to give in Jackson Hole in about two weeks.

All major sectors of the S&P 500 ended the day’s session in the green, led by technology and real estate.

Nvidia gained nearly 4%, leading the S&P 500 and Nasdaq higher. Uber jumped 11% after beating Wall Street expectations for its quarterly results. Caterpillar also gained 3% after better-than-expected results.

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(Written by Jean Terzian)

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