U.S. equities rose in the morning trading as the S&P 500 moved away from bear market territory after flirting with such levels in a volatile trading session on Friday.
The broad market benchmark rose 1.6% on Monday. On Friday, the S&P 500 slipped so far that it was on the verge of closing at least 20% below the January highs – which would be considered a bear market – before regaining ground. The Dow Jones Industrial Average rose 2% on Monday, or more than 600 points, and the technology-based Nasdaq Composite Index rose 0.9%. Ten of the 11 sectors of the S&P 500 were green, led by finance.
Shares have plummeted in recent weeks as investors watch the Federal Reserve raise an attack on high inflation. Price pressures have eroded some corporate profits, but money managers are also concerned about whether the tightening of financial conditions risks weighing on economic growth.
Inflation concerns have risen in recent months as China imposed blockades to sustain the expansion of Covid-19, adding tension to supply chains. Russia’s war against Ukraine has also pushed European countries away from Moscow’s oil and gas prices, adding to prices.
“This year, we’re dealing with a variety of issues, and in itself, it would usually be the main story of a particular year,” said Hugh Gimber, a global market strategist at JP Morgan Asset Management. “However, the markets have to deal with all of them at once.” This has increased volatility, he said.
Although 20% of sales generally define a bear market, what a bear market defines is just a change in the business cycle from expansion to contraction, said Shawn Snyder, head of investment strategy at Citi Personal Wealth Management. For investors, he said, that means the next important key is a sign that the bottom has hit rock bottom.
Although the bottom line has not yet been reached, Mr Snyder said investors are already looking. On average, the market needs 132 trading days to reach the top of a top-down market, and 213 trading days to reach a low, according to the Dow Jones Market Date.
Monday is the 97th trading day since the S&P 500 summit, so investors may have some avenues. “This is one of those things where you turn off the screens and go on holiday and hope to look better when you return,” Mr. Snyder said.
In individual shares, VMware’s shares rose 19% after The Wall Street Journal reported that Broadcom was in advanced negotiations to buy the technology company. Shares of Broadcom fell 4%.
Investors will also be looking at retail stock earnings reports this week, looking for clues as to how inflation and the lasting effects of the Covid-19 pandemic are affecting consumers. Macy’s,
Dollar General and Costco are among the companies willing to report.
Macy’s fell 2.7%, but Dollar General rose 2.9%. Costco rose 0.6%.
In bond markets, the benchmark 10-year Treasury bill yield rose to 2.889% from 2.785% on Friday. Profits and prices are reversed.
US crude prices fell 0.4% to $ 109.83 a barrel. Gas prices remained in record territory over the weekend, averaging about $ 4.59 nationwide.
Abroad, the Stoxx Europe 600 pan-continental rose 0.8%. The European Central Bank is likely to raise its key interest rate to zero or higher by September, President Christine Lagarde said in a blog post Monday, drawing a line under an eight-year experiment with negative interest rates amid high inflation and growing concern. about the weakness of the euro currency.
The euro gained 1% against the dollar, trading at $ 1.0669.
In Asia, the main indices closed with a mixed performance. Japan’s Nikkei 225 gained 1%, while South Korea’s Kospik gained 0.3%. China’s Shanghai Composite was flat, and Hong Kong’s Hang Seng was flat 1.2%.
Write to Caitlin Ostroff at firstname.lastname@example.org and to Paul Vigna at Paul.Vigna@wsj.com
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Stocks start higher this week after the Bear market approaches
Source link Stocks start higher this week after the Bear market approaches