U.S. stocks rose Monday after the S&P 500 hit a new intraday low of the year and the yield on the 10-year U.S. Treasury note hit 3% for the first time in more than three years.
The S&P 500 rose 23.45 points, or 0.6%, to 4155.38. The Dow Jones Industrial Average added 84.29 points, or 0.3%, to 33061.50. The Nasdaq composite rose 201.38 points, or 1.6%, to 12536.02.
Indices traded lower for most of the session but edged higher in the past hours. The S&P 500 index fell to as low as 4062.51, its lowest intraday since May 2021. That seems to be enough to spur value buyers, Instinet chief executive Frank Cappelleri said.
“Buying weakness… is one of the few long strategies that have proven successful so far this year,” he said.
The afternoon rally was a welcome respite for equity investors in a rough year. The S&P 500 fell 8.8% in April and the Dow fell nearly 5%, its worst monthly performance for the indexes since March 2020. The Nasdaq Composite is down more than 13% in the year. last month, the worst since October 2008. Technology stocks are particularly sensitive to higher interest rates.
With four months of 2022, the stock market is in its worst performance in decades. The S&P 500, down 13% so far this year, has had its worst start to the year since 1939, according to Dow Jones Market Data.
“It’s a very restless and nervous market,” said Sebastien Galy, a macro strategist at Nordea Asset Management. “It has been fueled by liquidity for a long time, and this has built into expectations for equities,” he said, a situation that is changing as central banks tighten policy. currency book.
Investors are awaiting Wednesday’s Federal Reserve policy meeting for more signals on the pace of monetary tightening, with markets anticipating a half-percentage point rise to counter Inflation is the highest in decades. The war in Ukraine and the outbreak of Covid-19 in China threaten to disrupt supply chains and drive up prices.
The change in Fed policy is changing the market calculus for investors, said Merk Investments analyst Nick Reece. For the first time in a long time, rising yields and falling bond prices are putting them in a more competitive position with stocks in the eyes of investors in terms of returns, he said.
“It reduces some of the ‘TINA’ effect that has underpinned the bull market since 2009. ‘TINA’ stands for ‘no alternative,’” Mr. Reece said. In the low interest world, investors can only find acceptable returns from stocks.
Yields on the short-term benchmark 10-year Treasuries touched 3% on Monday, the first time since late 2018. It hit 2.995%, up from 2.885% on Friday. The US dollar maintained its recent gains, with the WSJ US Dollar Index rising 0.4% following its biggest monthly jump in a decade in April.
Among individual stocks, shares of Spirit Airlines fell $2.21, or 9.4%, to $21.40 after the company rejected a buyback offer from JetBlue Airways,
stick with an existing plan to merge with Frontier Group. JetBlue shares rose 29 cents, or 2.6%, to $11.30 while Frontier fell 40 cents, or 3.8%, to $10.21.
Shares of Moody’s fell $15.35, or 4.9%, to $301.13 after the credit rating company said its profits fell about a third due to rising costs.
Earnings season has been pretty strong so far, with more than 80% of companies reporting beating analyst expectations, according to Refinitiv. Shares fell last month despite strong reports, investors said, on worries about the coming months.
Oil prices fell early but recovered from losses and then fell slightly, with US crude rising 0.5% to $105.17 a barrel. European Union officials are working on a proposal to sanction Russian energy. According to analysts at Nordic bank SEB, some observers doubt it will pass because it requires unanimous support from EU members, many of whom rely on Russian energy. .
Traders are also keeping an eye on the lockdown in China and looking ahead to the OPEC+ alliance meeting later this week where members will discuss their supply deal.
The transcontinental Stoxx Europe 600 fell 1.5%. Published data showed German retail sales fell in March, when economists expected an increase and consumer confidence in the EU fell more than expected. The UK stock market was closed for a holiday.
In Asia, most of the major benchmarks fell moderately. South Korea’s Kospi fell 0.3% and Japan’s Nikkei 225 fell 0.1%. Markets in China and Hong Kong were closed for the Labor Day holiday.
Write to Anna Hirtenstein at email@example.com and Paul Vigna at Paul.Vigna@wsj.com
Copyright © 2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8
https://www.wsj.com/articles/global-stocks-markets-dow-update-05-02-2022-11651476917?mod=rss_markets_main Stocks Climb After Worst Month Since 2020