Wall Street indices bounce back
Wall Street’s three major indexes rebounded on Monday with broad-based gains as investors regained some confidence after US equities’ biggest weekly drop in two years, but strategists stopped short of calling an end to the market pullback. The announcement of President Donald Trump’s budget, including an infrastructure spending plan, helped sectors such as S&P materials and industrials.
WALL STREET’s three major indexes rebounded on Monday with broad-based gains as investors regained some confidence after US equities’ biggest weekly drop in two years, but strategists stopped short of calling an end to the market pullback.
The announcement of President Donald Trump’s budget, including an infrastructure spending plan, helped sectors such as S& P materials and industrials.
But the bigger factor was likely the S& P’s test and rebound from a key technical level on Friday when it briefly fell 11.8% from its Jan. 26 record and below its 200-day moving average during that session, according to strategists.
“Investors probably were mulling things over the weekend and concluded that the economy is fairly strong, earnings are holding up, so there’s no particular reason to panic or sell. So some money probably came back into the market,” said John Carey, portfolio manager at Amundi Pioneer Asset Management in Boston.
The Dow Jones Industrial Average rose 410.37 points or 1.7% to 24,601.27; the S& P 500 gained 36.45 points or 1.39% to 2,656; and the Nasdaq Composite added 107.47 points or 1.56% to 6,981.96.
Michael Purves, chief global strategist at Weeden & Co. in New York, said Monday’s move showed “big, fast, money saying, ‘ Wait a second, buy this dip.’”
“You test the key support level and go back and test it again, which is what we did on Friday,” he added.
But while last week’s panic selling appeared to be done, strategists were not calling an end to the pullback. The S& P still closed 7.6% below its Jan. 26 record closing high. It confirmed a correction on Thursday, when it dropped 10% below the record.
Jeff Schulze, investment strategist, at Clearbridge Investments, in New York is expecting more volatility “as the tug- of- war from short- term negative price momentum is put up against the long-term fundamentals.”
He said “the long- term fundamentals will win out, but I think volatility will also be part of that equation.”
All the S& P 500’s major 11 sectors rose, though bond-proxy sectors real estate, utilities and telecommunications services underperformed as investors monitored rising interest rates after US 10-year Treasury yields hit a new four-year high of 2.902 earlier in the day.
The CBOE Volatility Index, the most widely followed barometer of expected near-term stock market volatility, ended down 3.45 points at 25.61, its lowest close since Feb. 2. The market took fright after strong wage-growth data on Feb. 2 raised the specter of rising inflation and fears of accelerated interest rate hikes, which ignited a rally in bond yields and a sell-off in stocks.
The S& P’s biggest boosts from single stocks came from Apple, Inc., which rose 4%, and Amazon. com, which ended up 3.5%.
Advancing issues outnumbered declining ones on the NYSE by a 2.80-to-one ratio; on Nasdaq, a 1.90- to- one ratio favored advancers. The S& P 500 posted one new 52-week high and eight new lows; the Nasdaq Composite recorded 24 new highs and 43 new lows. —