S&P 500, Nasdaq bounce in big rally

Wall Street rallied Monday to claw back almost all the losses from its slow start to the year.

The S&P 500 jumped 1.4% to pull within 0.7% of its alltime high set two years ago. It's a return of momentum for Wall Street's main measure of health, which was coming off its first losing week in the last 10.

The Nasdaq composite shot 2.2% higher for its best day in eight weeks, and the Dow Jones Industrial Average lagged the market with a more modest gain of 0.6%, or 216 points.

Boeing dragged on the Dow in its first trading after one of its jets suffered an inflight blowout over Oregon. It fell 8%. Spirit AeroSystems, which builds fuselages and other parts for Boeing, lost 11.1%.

Stocks of oil-and-gas companies were also heavy weights after Saudi Arabia gave indications of potentially weak demand for crude. Exxon Mobil fell 1.7%, and Marathon Oil lost 2.7% as a barrel of U.S. crude tumbled $3.04 to $70.77.

But the rest of Wall Street largely climbed as easing Treasury yields relaxed the pressure on the stock market.

Big Tech stocks led the way. They were the main reason for Wall Street's big gains last year, when excitement around artificial-intelligence technology made just a handful responsible for most of the S&P 500's returns. But they stumbled last week as markets broadly regressed.

Nvidia rose 6.4% after announcing several AIrelated products. Apple, meanwhile, rose 2.4% to bounce back from its worst week since September. They were the strongest forces lifting the S&P 500, along with Microsoft, Amazon and Alphabet.

Commercial Metals also jumped 7.5% after reporting stronger profit for the latest quarter than analysts expected. It said construction activity is healthy in North America, driving demand for steel and helping to offset weaker conditions in Europe.

More earnings results will be arriving at the end of the week. Delta Air Lines, JPMorgan Chase and UnitedHealth Group will be among the companies kicking off the S&P 500's reporting season on Friday for the final three months of 2023.

The highlight of the week may be Thursday's release of the latest inflation data for U.S. consumers. A cooldown there has ignited hope on Wall Street that the Federal Reserve will soon see enough improvement to not only halt its hikes to interest rates but to begin cutting them.

The Fed has already hiked its main interest rate to the highest level since 2001, which grinds down on the economy and hurts prices for investments, in hopes of conquering high inflation. The Fed said last month it's seen improvement, and Wall Street's expectation is for it start cutting rates as soon as March.

Treasury yields have already sunk in the bond market on such expectations, and they edged lower Monday. The yield on the 10-year Treasury fell to 4.01% from 4.05% late Friday. It was above 5% in October, at its highest point since 2007 and putting sharp downward pressure on the stock market.

The powerful resulting rally for stocks has caused some on Wall Street to say at least a pause is likely in the near term. The market looks “extremely expensive,” according to Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management.

Critics also warn traders may be too optimistic about how deeply the Federal Reserve may cut rates this year. The Fed has indicated a potential for three cuts, but many traders are anticipating at least six. That large a number may not be likely unless a recession forces the Fed's hand, critics say.