STOCKS BOUNCE BACK INTO BLACK
Dow ends skid, rises 236 points as bond yields finish near nine-month highs
S“You typically get a nice bounce after a series of down days.” Quincy Krosby, market strategist at Prudential Financial
tocks surged and bond yields hit nearly ninemonth highs Wednesday as good news on Greek debt talks and U.S. wage growth encouraged investors to step up and take some risk.
The Dow Jones industrial average scored its best gain in a month, a 236.36-point, 1.3% rise to 18,000.40 that put the bluechip barometer back in the black for 2015. It was the Dow’s best day since a 267-point jump May 8.
The other major U.S. indexes fared well, too. The Standard & Poor’s 500 climbed 25.05 points, or 1.2%, to 2105.20 and the techheavy Nasdaq composite rose 62.82 points, or 1.3%, to 5076.69.
As investors were buying stocks, they were dumping bonds again. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.48% — nearly crossing 2.5% for the first time since Sept. 26. An increased willingness to take risk drove the flight from bonds to stocks, says Boris Rjavinski, fixed income strategist at UBS.
“There were news of possible compromise between Greece and its lenders, which might help set risk-on tone to the markets,” Rjavinski says. Another bullish data point, he adds, was an employee compensation indicator released in the U.S. Wednesday that showed a 4.9% increase year-on-year.
The Dow Jones industrial average’s big May 8 jump came as investors reacted to a strong April jobs report following a super-weak reading on jobs in March. This time recent market action had stocks poised for a rebound.
Stocks came into Wednesday on a four-day losing streak — the first since May — that had dropped the Dow more than 300 points. It’s not unusual for stocks to find buyers after a string of losses.
“You typically get a nice bounce after a series of down days,” especially when the news headlines related to geopolitics and the global economy are market-friendly, says Quincy Krosby, market strategist at Prudential Financial.
“Potential for Greek deal helps the tone of the market,” she says, adding that investors that had been betting against the market had to change strategy once the market shot up Wednesday.
Andrea Kramer, an analyst at Schaeffer’s Investment Research, noted in a report that the bullish price action is being driven by tech and energy issues as well as a drop in the value of the U.S. dollar vs. a basket of foreign currencies, which makes exports from U.S. firms more affordable.
The mere hint of a thaw in the deadlock between Greece and its Eurozone creditors is being viewed as a major positive by Wall Street.