Stock market rallies after flirting with the bear market

U.S. stocks rose in Monday’s trading, led by the financial sector, as the S&P 500 moved away from bear market territory after flirting with such low levels in a volatile trading session on Friday.

The broader market benchmark has recently risen around 2.1%. At one point on Friday, the S&P 500 slid so far it was on track to close at least 20% below its January high – what would have been considered a bear market – before regaining momentum. ground. The Dow Jones Industrial Average rose 1.9%, while the technology-focused Nasdaq Composite Index rose 1.5%.

All 11 sectors of the S&P 500 were up on Monday. Financials are doing the best with an increase of 3.7%. JPMorgan Chase rose about 7.3% after offering updated forecasts in a presentation on Monday, painting a better picture of the economic outlook. The bank said it expects to benefit from loan growth and rising interest rates.

“Overall, the short-term credit outlook, particularly for the U.S. consumer, remains strong,” Chief Financial Officer Jeremy Barnum said Monday. Goldman Sachs rose 4.1%, while the KBW Nasdaq Bank Index was ahead 4.7%.

Other stocks that would benefit from a stronger economy also rose. Deere rose 6.9%. Caterpillar rose 3.8%. Discount retailer Ross Stores gained 10%, on pace with its best day since November 2020.

Stocks have fallen in recent weeks as investors debated how aggressively the Federal Reserve would raise interest rates to tame high inflation. Pricing pressures have eroded some corporate earnings, but fund managers are also concerned that an excessive tightening of financial conditions could weigh on economic growth.

Inflation concerns have been heightened in recent months as China implemented containment measures to contain the spread of Covid-19, adding strain to supply chains. Russia’s war on Ukraine has also caused European countries to turn away from Moscow’s oil and gas, driving up prices.

“This year we face several issues, which in themselves would normally be news in any given year,” said Hugh Gimber, global market strategist at JP Morgan Asset Management. “Yet the markets have to manage them all at the same time.” This led to increased volatility, he said.

While a 20% selloff typically defines a bear market, what a bear market defines is just a shift in the business cycle from expansion to contraction, said Shawn Snyder, chief strategy officer. investment in Citi Personal Wealth Management. For investors, he said, that means the next big key is a sign that a bottom has been reached.

Although the bottom is unlikely to be reached yet, Snyder said investors are already looking for it. On average, the market takes 132 trading days to move from a high to the start of a bear market, and 213 trading days to bottom, according to Dow Jones Market Data.

Monday is the 97th trading day since the top of the S&P 500, so investors may have a ways to go. “It’s one of those times when you turn off your screens and go on vacation and hope it’ll be better when you get back,” Snyder said.

Among other individual stocks, VMware shares jumped 21% after the Wall Street Journal reported that Broadcom was in advanced talks to buy the technology company. Broadcom shares fell 3.2%.

Investors will also be looking at retail stock earnings reports this week, looking for clues about how inflation and the lingering effects of the Covid-19 pandemic are affecting consumers. Macy’s,

Dollar General and Costco are among the companies expected to report.

Macy’s added 1%, Dollar General rose 2.9% and Costco rose 2.8%.

In bond markets, the yield on the benchmark 10-year Treasury note climbed to 2.853% from 2.785% on Friday. Yields and prices move in opposite directions.

US crude prices rose less than 0.1% to $110.30 a barrel. Gas prices at the pump remained in record territory over the weekend, averaging about $4.59 a gallon nationally.

Overseas, the pancontinental Stoxx Europe 600 index rose 1.3%. The European Central Bank is expected to raise its key rate to zero or more by September, President Christine Lagarde said. in a blog post On Monday, drawing a line under eight years of experience with negative interest rates amid record inflation and growing concerns over a weak euro.

The euro gained 1.1% against the dollar to trade at $1.0679.

Traders worked on the floor of the New York Stock Exchange on Friday.


Photo:

Ted Shaffrey/Associated Press

In Asia, the main indices closed on a mixed note. Japan’s Nikkei 225 gained 1%, while South Korea’s Kospi edged up 0.3%. China’s Shanghai Composite was flat and Hong Kong’s Hang Seng fell 1.2%.

Write to Caitlin Ostroff at [email protected] and Paul Vigna at [email protected]

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