Wall Street snaps back following dismal week

NEW YORK >> Stocks rebounded on Wall Street Monday and clawed back most of their sharp loss from last week.

The S&P 500 snapped 1.4% higher as the initial jolt passed from the Federal Reserve’s reminder that it will eventually offer less help for markets.

Oil producers, banks and other companies that were hit particularly hard last week made the biggest gains. Highgrowth tech stocks lagged.

Shorter-term yields fell, and longer-term yields rose in another reversal from last week’s initial reaction to the Fed’s saying it may raise rates twice by late 2023.

The market’s immediate reaction to last week’s Fed news was to send stocks lower and interest rates higher. Any shift by the Fed would be a big deal, after investors have feasted on easy conditions with ultra-low rates for more than a year. Higher rates would make stock prices, which have been climbing faster than corporate profits, look even more expensive than they do already.

But it’s not like the Fed said it will jack rates higher off their record low of nearly zero anytime soon.

“If markets are worried about a march back to more normal monetary and fiscal policy as the economy recovers, it will be a very long march,” Barings chief global strategist Christopher Smart said. In the meantime, support from the Fed and the U.S. government should continue to help stock prices, even if they do look expensive compared with history, he said.

Companies whose profits are the most closely tied to the economy’s strength and inflation were leading the way on Monday.