Shortly after the open, the
Dow Jones Industrial Average
gained 296 points, or 1%, while the
advanced 0.8%, and the
has risen 0.5%.
“Catalysts for the move were the Biden comments overseas that the Trump tariffs were being reviewed and would be reduced or eliminated,” writes NatAlliance Securities’ Andrew Brenner.
The move is a continuation of Friday’s late rally, one that saw the S&P 500 close Friday at 3901, up 0.01%, after falling as low as 3810, a level that would have meant a bear market, or 20% or more below its all-time high. The S&P 500 has to close below 3837 for it to officially be in a bear market.
Still, it wasn’t a good week for the S&P 500, which fell 3% last week and has declined for seven straight weeks. Last week, the Dow slumped 2.9%, extending its weekly losing streak to eight, and the Nasdaq dropped 3.8%. Losing streaks don’t get much longer than that, and there’s no better time than the present for the S&P 500 to rally. There have been just three other losing streaks of seven weeks or more, according to Deutsche Bank, and the sixth-largest non-recession correction on record.
It might be a bigger issue if stocks can’t sustain their bounce from here. The S&P 500, for one, closed just off its lowest levels since March 2021, and a further drop could send it down to 3617, writes Rick Bensignor of Bensignor Investment Strategies. And with consumer staples stocks getting crushed last week, there may be just one sector standing between the S&P 500 and that bear market. “Investors dismantled normally safe Consumer Staples names,” Bensignor writes. “If they also start taking Energy names apart, we’d likely be in the final downdraft that wouldn’t begin to end until we started seeing large cap Tech and Discretionary names starting to outperform.”
Complicating matters Monday is the lack of news—good or otherwise—that could explain the bounce. Sure, a report that
(ticker: AVGO) was in advanced talks to acquire
(VMW) might be improving sentiment toward tech stocks—The Wall Street Journal said the technology companies were discussing a cash-and-stock deal that could come soon—helping boost VMware shares by 20% Monday. Broadcom fell 4.8%.
Comments from President Biden that he was considering reducing tariffs on China also was lifting market sentiment. The tariffs were imposed by the Trump administration. Biden also launched a new economic agreement on Monday with 12 Indo-Pacific nations, which represent about 40% of global GDP. The pact is aimed at countering China’s influence.
Asian shares ended Monday’s session mixed, while European stocks traded mostly higher.
But Monday promises to be the calm before the not calm. Investors this week will be monitoring the minutes from the latest Federal Reserve meeting to gauge the central bank’s next move on interest rates. It has been pushing rates higher in an effort to cool historically high inflation. Some economists have expressed concerns the Fed could move too aggressively and push the U.S. into a recession. Friday’s release of the personal-consumption expenditures report should also give a read on how the Fed’s battle against inflation is going.
Those will go a long way in determining whether Monday’s rally is the beginning of a sustainable rally—or just a blip before the bear finally arrives.
Here are other stocks on the move Monday:
(GME) fell 2.1% after the company launched a wallet for cryptocurrencies and NFTs.
(ZM) slipped 3.3% ahead of the company’s fiscal first-quarter earnings report, scheduled for after the closing bell Monday. Shares of the videoconferencing company have lost all their Covid-era gains, with the stock declining around 50% so far this year, and more than 70% over the last 12 months.
(AAPL) has risen 1.1% early Monday. The Wall Street Journal reported over the weekend that the tech giant has begun telling some of its contract manufacturers that it was looking to India and Vietnam to boost production, seeking to reduce its dependence on China as Beijing’s strict anti-Covid policy has caused supply-chain bottlenecks.
(JPM) has risen 3% after the bank raised its estimate for net interest income, excluding markets, for 2022. JPMorgan is holding an investor day on Monday.
Write to Joe Woelfel at email@example.com