Home Investing Strategy Stocks start the week higher after nearing a bear market

Stocks start the week higher after nearing a bear market

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Stocks start the week higher after nearing a bear market


U.S. stocks rose on Monday, led by the financial sector, with the S&P 500 breaking out of bear market territory after hitting bear territory in a volatile session on Friday.

The broader market benchmark was up about 1.5% recently. At some point on Friday, the S&P 500 is down so far, on track to close at least 20% below its January peak — which would be considered a bear market — before recovering lost ground. The Dow Jones Industrial Average rose 1.9%, while the tech-heavy Nasdaq Composite gained 1%.

All but one of the 11 S&P 500 sectors rose on Monday, with financials the best performer, up 3.6%. JPMorgan rallied about 7% after providing updated guidance in a speech on Monday, painting a better picture of the economic outlook. The bank said it expected to benefit from loan growth and higher interest rates.

“Overall, the near-term credit outlook, especially for the U.S. consumer, remains strong,” Chief Financial Officer Jeremy Barnum said on Monday.

Goldman Sachs rose 3.9% and the KBW Nasdaq Bank Index rose 4.5%.

Other stocks that would benefit from a strong economy also rose. Deere rose 6.9%. Caterpillar rose 3.3 percent. Discount retailer Ross Stores rose 8.9%, posting its best one-day gain since November 2020.

Stocks have pulled back in recent weeks as investors discuss how aggressively the Federal Reserve will raise interest rates to curb rising inflation. Price pressures have eroded some corporate earnings, but fund managers are also concerned that tighter financial conditions could weigh on growth.

In recent months, as China imposed a lockdown to curb the spread of Covid-19, inflation fears have risen, adding to the pressure on supply chains. Russia’s war on Ukraine has also led European countries to stay away from Moscow’s oil and gas, pushing up prices.

“This year, we’re dealing with several issues that themselves typically make headlines in any year,” said Hugh Gimber, global market strategist at JPMorgan Asset Management. “And yet the market has to deal with all these issues at the same time,” he said, adding to volatility.

Shawn Snyder, head of investment strategy at Citi Personal Wealth Management, said that while a 20% sell-off usually defines a bear market, a bear market defines only a change in the business cycle from expansion to contraction. For investors, that means the next big key is a sign of a bottom, he said.

While the bottom may not be here yet, Snyder said investors are already looking for it. According to Dow Jones Market Data, on average, it takes 132 trading days for the market to go from a high to a bear market and 213 to fall to a low.

Monday was the 97th session since the S&P 500’s high, so investors may still have some way to go. “This is when you turn off your screens and go on vacation, hoping you’ll come back looking better,” Mr Snyder said.

VMware shares rose 21% after the Wall Street Journal reported that Broadcom was in advanced talks to buy the tech company. Broadcom shares fell 3.4%.

Investors will also be watching earnings reports from retail stocks this week for clues on how inflation and the lingering fallout from the Covid-19 pandemic are affecting consumers.Macy’s,

Dollar General and Costco are among the companies that will report soon.

Macy’s rose 0.3%, Dollar General rose 2.9% and Costco rose 2.1%.

In bond markets, the yield on the benchmark 10-year U.S. Treasury note rose to 2.860% from 2.785% on Friday. Yields and prices move inversely.

U.S. crude fell 0.1% to $110.15 a barrel. Gas prices at gas stations remained at record levels over the weekend, averaging about $4.59 a gallon nationwide.

Overseas, the pan-European Stoxx Europe 600 rose 1.3%. ECB President Christine Lagarde said in a blog post on Monday that the European Central Bank is likely to raise its key interest rate to zero or above by September, amid record inflation and concern for Europe. The central bank’s growing concerns draw the line to an eight-year experiment with negative interest rates. The euro is weak.

The euro rose 1.1% to $1.0679.

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


photo:

Ted Shavery/Associated Press

In Asia, major stock indexes ended mixed. Japan’s Nikkei 225 rose 1%, while South Korea’s Kospi edged up 0.3%. China’s Shanghai Composite was flat, while Hong Kong’s Hang Seng fell 1.2%.

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

Copyright © 2022 The Dow Jones Company. all rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

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