Stocks open higher after worst week for S&P 500 in two years

US stocks jumped, giving investors a reprieve from the recent extension of stifling trading that sent stocks and crypto down.

The S&P 500 rose 1.6% on Tuesday, while the Dow Jones Industrial Average added 1.4%. The Nasdaq Composite Index jumped 1.7%. The US stock market was Monday closed On the occasion of the fifteenth Eid al-Fitr.

Bitcoin It rose along with other cryptocurrencies, and continued to recoup recent losses after that Painful weekend. Bitcoin recently traded at around $21,028, up 2.9% from its value at 5pm ET on Monday, and about 19% above its recent low of $1,701.58, according to CoinDesk data.

Investors’ appetite for riskier assets on Tuesday comes after a turbulent week in the markets, sparked by the Federal Reserve’s approval of a 0.75 percentage point interest rate increase. The largest since 1994. This has prompted investors to seek to offload riskier assets amid growing concerns that central bankers will plunge the US economy into recession. pointer The S&P 500 ended the week with 5.8% lower, its biggest one-week drop in more than two years.

Government leaders and officials have tried in recent days to calm an increasingly nervous nation that an economic slowdown is not guaranteed as central bankers have been taming decades-old high inflation. President Biden said Monday that he spoke with Lawrence Summers, the former Treasury secretary, and reiterated that Does not see recession as inevitable. As St. Louis Federal Reserve Bank President James Bullard said the economy appears to be on the right track More expansion this year.

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However, many market watchers are preparing for an economic downturn. In a note Monday, a team of

Goldman Sachs

Economists raised their forecasts for a recession in the United States, citing concerns that the Federal Reserve will feel compelled to respond aggressively to inflation data, even if economic activity slows. The team now sees a 30% probability of entering a recession within the next year, versus 15% previously, and a 25% probability of entering a recession in the second year if it was averted in the first.

Investors and analysts say they Expect more pain In the markets, although some are still willing to enter and buy shares at a discount after the sale The S&P 500 Index plunged 23%. this year. Many pointed to Tuesday’s recovery as a bounce from last week’s decline.

“It still looks like a fairly quick bounce,” said Viraj Patel, global macroeconomic analyst at Vanda Research, referring to a term used to describe a short recovery in the market. He said that the willingness of investors last week to abandon the shares of the gaining sectors this year, including energy and utilities shares, may be an indication that the decline this year has entered its final stages. However, he said he believes the sale “still has legs to go”.

Tuesday’s bullish mood came along with a sell-off in US government bonds, sending the 10-year US Treasury yield higher. The yield on the benchmark bond was trading at 3.292%, up from 3.238% on Friday. Yields and bond prices move in opposite directions.

In individual stocks, gains were spread across many sectors, with shares of technology, travel companies and banks trading higher. cruise line

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Royal Caribbean Group

rose 1.3% while

American Airlines Group

It rose 1.4%, buoyed by expectations for what is expected to be a busy travel season.

Growth stocks, which have been battered this year, posted gains before the opening bell. Data and software company

Palantir . techniques

Jumped 4%, the chipmaker

nvidia

3.3% profit and

Tesla

Added 4.5%. Megacap technology companies

Amazon.com

And the

Netflix

They each earn 2.4% and 1.3%, respectively.

Kellogg

Shares jumped 5% after the company said it plans to do so It divided itself into three general trading companies.

This week, investors will be watching Federal Reserve Chairman Jerome Powell’s testimony to Congress for any further indication on the path for interest rates this year. He is expected to testify on Wednesday and Thursday. Housing and consumer confidence data are also due.

For now, Seema Shah, chief strategist at Principal Global Investors, said investors could see value in companies whose shares have taken a hit this year. However, she said, she expects the market to fall further once investors begin to see continued declines in earnings growth.

“I think what you can see is a [modest] It went up over the summer…As you enter the fall months and the next earnings season, I think a lot of the economic data will start shifting and earnings growth will start shifting. However, she noted, so far, “feelings are deteriorating very quickly.”

Other safe haven assets fell on Tuesday as investor sentiment improved. The WSJ Dollar Index, which measures the US currency against a basket of 16 currencies, fell less than 0.1%. Gold prices fell 0.1 percent to $1,839.40 an ounce.

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


picture:

Spencer Platt / Getty Images

In commodities, oil prices rose. Brent crude, the international benchmark, rose for a second day, by 1.3% to $115.57 a barrel. Oil prices fell last week on concerns that a possible recession will affect energy demand.

Offshore, the Stoxx Europe 600 continental index was up 0.5%. In Asia, trading was mixed. Hong Kong’s Hang Seng rose 1.9% and Japan’s Nikkei 225 rose 1.8%, while China’s Shanghai Composite lost 0.3%.

Write to Caitlin McCabe at [email protected]

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