Wall Street stocks ended higher on Monday following a market sell-off in previous sessions as investors eyed a busy week for quarterly results from key companies that would provide a glimpse of the US economy’s health.
The Dow Jones Industrial Averagejumped more than 400 points before closing up 253.58 points, or 0.7%, at 38,239.98.
The S&P 500climbed 0.9%, and the Nasdaq gained 1.1%. Both snapped six-day losing streaks, which had been caused by investors re-evaluating their expectations on interest rate cuts in the wake of strong economic data, geopolitical tensions, persistent inflation and commentary from Federal Reserve officials..
Megacap growth stocks ended higher, with gains in Alphabet, Amazonand Apple. Nvidiarose 4.3%, rebounding from a 10% drop in the previous session.
Markets were gearing up for quarterly results from megacap companies this week, including some of the so-called Magnificent Seven stocks such as Tesla, Meta Platforms, Alphabetand Microsoft.
“I think it’s just standard buy-on-the-dip after a 5% pullback that kind of wakes people up to put money to work,” said Lamar Villere, portfolio manager at Villere & Co in New Orleans.
“Investors are looking ahead to this week with hugely significant earnings coming out and with concerns about what the Fed is doing with pushing back any rate cuts,” Villere added.
Money markets are pricing in only about 41 basis points (bps) of rate cuts this year, down from about 150 bps seen at the beginning of the year, according to LSEG data.
In addition to top corporate earnings, markets are also awaiting the release later this week of the March personal consumption expenditure (PCE) data – the Fed’s preferred inflation gauge – to further ascertain the monetary policy trajectory.
Fed policymakers are in a media blackout period ahead of their policy meeting on May 1.
“This is predicated on positive technical expectations on tech earnings and traders not wanting to be short in front of it, and the PCE numbers later this week that people are somewhat sanguine about as well,” said Thomas Hayes, chairman of hedge fund Great Hill Capital in New York.
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