4:17pm: Sentiment has improved on Wall Street, at least for now
The Dow gained 618 points, 2%, to close at 31,880. The Nasdaq added 181 points, 1.6%. to 11,535, and the S&P 500 picked up 72 points, 1.9%, to 3,974.
The question going forward is whether the rally will be short-lived or reflective of a broader trend.
“With so many stocks down significantly year to date, it won’t be surprising to see a brief reprieve in U.S. markets today,” MissionSquare Retirement Chief Investment Officer Wayne Wicker said, as reported by CNBC. “However, with the given challenges related to inflation, rising interest rates and geopolitical events as we come into the summer months, investors should expect continued volatility in the near term.”
Traders reacted in part to comments from President Joe Biden that the US is considering reducing tariffs on some products imported from China. “I am considering it,” Biden said. “We did not impose any of those tariffs. They were imposed by the last administration and they’re under consideration.”
10am: Proactive North America headlines:
Pfizer/BioNTech say third vaccine dose is 80% effective against Omicron in kids 5 and younger
Musk suggests he wants a discount on his Twitter bid proportionate to number of spam bots
Starton Therapeutics wins approval to proceed with final dose escalation in Phase 1 clinical study evaluating STAR-LLD
TraceSafe announces record year in 2021 with annual revenue of US$13M
Irwin Naturals completes acquisition of KHC Capital Group
9.55am: US shares start higher on Monday
US stocks started Monday on the front foot as Wall Street bids to recover from last week's big sell-off.
Shortly after the bell, the Dow Jones Industrial Average started up around 372 points at 31,643.
The S&P 500 added around 43 at 3,945. The technology stock laden Nasdaq added around 112 at 11,467.
Investors are trying to call the bottom of what seems like a relentless decline in global equities - soon to be into its six month of 2022.
Oppenheimer’s chief investment strategist John Stoltzfus was quoted as saying that such sell-offs aren’t uncommon at times Federal Reserve tightening, and that the market appears "way over sold".
On the earnings front, which could prompt some movement, Zoom Video is set to report results today followed by Costco (NASDAQ:NA:COST), Nvidia, Dollar General, Nordstrom and Macy’s later this week.
6.30am: Monday rally
US stocks were expected to open higher on Monday, having narrowly avoided bear market territory last week, as bargain hunters emerge to pick up stocks at lower prices.
Markets are expected to remain volatile, however, as concerns about slowing economic growth, higher levels of inflation and rising interest rates continue to simmer in the background.
Futures for the Dow Jones Industrial Average were up 0.5% in pre-market trading, while those for the broader S&P 500 index rose 0.6%, and contracts for the tech-heavy Nasdaq-100 gained 0.4%.
“US futures are in the positive this Monday, as some investors see opportunity in the actual market dip. But the trading conditions will likely remain choppy, and gains may remain short-lived,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “In the medium run, there is a stronger case building for a further retreat in the S&P500 stocks. Investors now eye a return to the 3500/3600 range, according to the latest Bloomberg survey.”
Last week, the S&P 500 dipped 20% below its all-time high into so-called bear market territory but late buying helped take the edge off losses and shares ended Friday around 19% below its record. The S&P and Nasdaq each lost ground for the seventh consecutive week. The Dow, meanwhile, has dropped for eight-straight weeks.
The highlight for this week comes on Wednesday when the minutes from the US Federal Reserve's last rate-setting meeting are released.
“At this point, most of the Federal Reserve (Fed) hawkishness has already been broadly priced in - including a small chance of a 75bp hike in next meeting. Therefore, we should not see a significant, further erosion in the market mood post-minutes,” said Ozkardeskaya. “But again, that doesn’t mean that the mood is good enough for a sustained market recovery.”
In an indication that investors are still seeking the perceived safety of gold as a store of value at a time of uncertainty, the precious metal was up 1.2% at $1,863.3 an ounce.
Elsewhere, oil prices were higher. WTI crude oil futures were up 1.3% at $111.74 a barrel and Brent crude futures gained 1.5% at $114.19.
Ozkardeskaya noted that the possibility of Shanghai’s COVID-19 related lockdowns ending along with reluctance in Europe to fully ban Russian oil are driving crude prices higher this morning.
“It’s difficult to say that there is a solid upside potential in oil at the current levels, as the recession worries, and China’s zero Covid policy remain serious threats to the global demand,” she added.
Contact the author at jon.hopkins@proactiveinvestors.com